Spirit To Decide Between JetBlue and Frontier Before Scheduled Shareholder Meeting

A Spirit Airlines Airbus A319 landing in Los Angeles. [Courtesy: Spirit Airlines]

In the latest update from the Spirit Airlines (NYSE: SAVE) takeover saga, the low-cost carrier said this week that it would decide whether to merge with JetBlue (NASDAQ: JBLU) or Frontier (NASDAQ: ULCC) before the shareholder meeting that’s scheduled for June 30.

Spirit president and CEO Ted Christie said in a statement that "consistent with its fiduciary duties, Spirit's Board of Directors is engaging in discussions with JetBlue with respect to the proposal received on June 6, and is also continuing to work with Frontier under the terms of the existing merger agreement between Spirit and Frontier."

Spirit shareholders were scheduled to vote on the Frontier proposal for the merger on June 9, but JetBlue—bent on not losing out on the opportunity to expand its footprint—increased its offer by $150 million, and accused Spirit's board of not being upfront with its shareholders. With that, Spirit announced it would delay the vote until June 30 to give itself more time to decide which offer to take.  

This time, Christie said Frontier and JetBlue would be given access to the same due diligence information on the same terms to conclude this saga ahead of the special meeting of Spirit stockholders.

While Frontier has been quiet on most updates, JetBlue's CEO Robin Hayes described Spirit's decision last week to delay the vote as a "necessary first step toward genuine negotiations." Moreover, Hayes added that he was confident that a merger between JetBlue and Spirit would be a suitable competitor for the big four airlines—Delta  (NYSE: DAL), American (NASDAQ: AAL), United (NASDAQ: UAL), and Southwest (NASDAQ: LUV).

DOJ Case Against JetBlue a Big Factor

In related news, last week a district judge rejected a bid by JetBlue and American Airlines to have an antitrust lawsuit filed by the DOJ against them dismissed, which means they will have to handle the dispute in court in September. This is important because one of Spirit’s stated hesitations with regard to a merger with JetBlue was this lawsuit, which intends to untangle JetBlue and American’s Northeast Alliance. Spirit has said the alliance is anticompetitive. The airline added that in the event of a judgment to disband the alliance, it would be unlikely that  a merger deal with JetBlue would survive similar regulatory scrutiny.

In its update, Spirit said that while it would choose between JetBlue and Frontier, until then, it was bound to its initial merger plans with Frontier, describing a "superior proposal"—a coy jab at JetBlue's pitch—as one that would be "reasonably capable of being consummated and more favorable to Spirit's stockholders from a financial point of view."

Michael Wildes holds a master’s degree in Logistics & Supply Chain Management, and a bachelor’s degree in Aeronautical Science, both from Embry-Riddle Aeronautical University. Previously, he worked at the university’s flight department as a Flight Check Airman, Assistant Training Manager, and Quality Assurance Mentor. He holds MEI, CFI & CFII ratings. Follow Michael on Twitter @Captainwildes.

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