JetBlue makes bid for Spirit Airlines amid Frontier talks

JetBlue Airways made an unsolicited cash bid to buy bargain air carrier Spirit Airlines, Spirit announced Tuesday.

JetBlue is seeking to acquire Spirit’s common stock for $33 a share, Spirit said, adding that its board of directors will evaluate the proposal and pursue the “best interests of Spirit and its stockholders.”

The combination “would position JetBlue as the most compelling national low-fare challenger to the four large dominant US carriers by accelerating JetBlue’s growth,” JetBlue said in a statement, saying it would prompt Delta Air Lines, American Airlines, United Airlines and Southwest Airlines to lower fares more than they would when ultra-low-cost airlines enter new markets.

The announcement comes amid a time of change for the airline industry, which saw interest in travel plummet at the start of the coronavirus pandemic. Air travel has since rebounded to near pre-pandemic levels, although several carriers have been caught unprepared by the rising demand in recent months.

Tuesday’s bid introduces a significant factor into an ongoing merger effort involving Spirit and low-cost carrier Frontier Airlines, which would create the nation’s fifth-largest carrier.

JetBlue said the proposed $3.6 billion deal would be “superior” to Spirit’s existing agreement with Frontier, representing a premium of 50 percent to Spirit’s recent closing price.

In a statement responding to JetBlue’s bid, Frontier said the latest offer “would lead to more expensive travel for consumers.” Frontier cited “significant East Coast overlap between JetBlue and Spirit” that it said would reduce competition and options for consumers.

Frontier, Spirit announce merger to create fifth-largest US airline

“It is surprising that JetBlue would consider such a merger at this time given that the Department of Justice is currently suing to block their pending alliance with American Airlines,” Frontier said in a statement.

Last year, the Justice Department filed suit challenging an alliance between American and JetBlue Airways that allows the carriers to sell each other’s seats on selected flights in the Northeast.

Under the Spirit and Frontier agreement, Spirit shareholders would receive 1,9126 shares of Frontier stock plus $2.13 in cash for each existing Spirit share they own, according to Spirit. Frontier said that agreement has “substantial upside potential” for both companies’ shareholders.

Spirit said it would respond to JetBlue “in due course.”

JetBlue said its offer would allow the airline to redouble its “long-standing commitment to Florida,” in addition to growing in Los Angeles, San Juan, Las Vegas, Dallas, Houston, Chicago, Detroit and Atlanta. The bigger JetBlue would also fly into St. Louis, Memphis, Louisville, Atlantic City and Myrtle Beach, SC, for the first time, it said.

Any merger among the nation’s airlines would be the first since Alaska Airlines announced that it would acquire Virgin America in 2016. Before that, American Airlines and US Airways announced their intent to combine operations in 2013, which created the world’s largest air carrier.

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