Spirit’s board of directors announced their intentions in an open letter to JetBlue and Hayes published on their website.
Spirit Board Believes “Superior Proposal” Would Not Pass Regulatory Review
On April 5, 2022, JetBlue submitted what they called a “Superior Proposal” to Spirit’s board of directors, days after the Miramar, Florida-based airline announced they would combine with Frontier to create the nation’s largest ultra-low-cost carrier. JetBlue revised their offer on April 29, but did not provide details of the changes to the public.
After consideration, Spirit told Hayes and JetBlue they would not move forward with their offer, claiming the move did not meet the definition of “Superior Proposal” compared to the Frontier Airlines deal. Their rationale is based on the odds of approval from regulators, after the U.S. Department of Justice sued JetBlue and American Airlines over their Northeast Alliance.
“As you know, Spirit and many other airline and air travel constituencies have publicly opposed the [Northeast Alliance] on grounds that it is anticompetitive,” Spirit CEO Ted Christie and board chair H. McIntyre Gardner write in the rejection letter. “We struggle to understand how JetBlue can believe DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest ULCC carrier.”
Because Spirit does not believe the merger would be approved by the Justice or Transportation Departments, the airline believes moving forward would impose “…on our stockholders a degree of risk that no responsible board would accept.”
When the deal commences, the Frontier-Spirit merger would create the fifth-largest carrier in the United States, behind Southwest Airlines and ahead of other ultra-low-cost carriers. Both airlines believe the merger will close in the second half of 2022, assuming federal regulators and shareholders approve the proposal.
Despite Rejection, JetBlue Submits Third Proposal
Even though Spirit rejected the deal, JetBlue is not going quietly into the goodnight on their merger hopes. After the Spirit announcement, the New York-based airline announced a third revision on their proposal, including a $33 per share purchase price, a remedy package which would divest Spirit assets in New York, Boston, Ft. Lauderdale, and other airports to reduce the chance of running afoul of the Northeast Alliance. The new offer also features a $200 million reverse break-up fee if the deal does not go through.
Spirit has not commented on the third JetBlue proposal.
Source: frugal travel guy