JetBlue Makes Million Dollar Cash Offer for Spirit Airlines – NBC4 Washington

NEW YORK – JetBlue Airways has offered to buy Spirit Airlines for about $3.6 billion and scrap a plan for Spirit to merge with rival carrier Frontier Airlines.

Spirit said Tuesday that it received an unsolicited offer from JetBlue. He said he will evaluate the offer and decide what is best for shareholders.

In a statement, New York-based JetBlue said the combination with Spirit would lead to creating “the lowest fares in the nation” for the country’s four largest airlines: American, Delta, United and Southwest.

Frontier used the same argument in February to back its proposed acquisition of Spirit, saying creating the nation’s fifth-largest airline would save consumers $1 billion a year.

JetBlue offered $33 a share in cash, which it said gives Spirit 37% higher value than Frontier’s offer. However, Frontier’s offer would allow Spirit shareholders to keep 48.5% of the combined airline. Frontier said its cash-and-stock offer was worth $2.9 billion, though a drop in Frontier shares has reduced its value since February.

JetBlue Airways made a $3.6 billion all-cash offer for Spirit Airlines, raising questions about Spirit’s deal to combine with rival discount carrier Frontier Airlines.
The offer comes less than two months after Spirit and Frontier agreed to merge into a discount airline giant.
Trading in Spirit shares was halted before the market closed on Tuesday after the shares rose more than 22% to $26.92.

A Spirit Airlines flight was diverted to Denver on Wednesday after a passenger showed up to try to open an emergency exit door. Spirit Airlines reported that “opening a door in flight is impossible due to air pressure inside the cabin pinning the door against its frame with a force more powerful than any person could overcome.”

Shares of Florida-based Spirit soared 22% after The New York Times first reported the JetBlue offer on Tuesday. JetBlue shares fell 7%.

An alliance between Frontier and Spirit would combine Frontier’s route map, based in Denver, in the western United States, with Spirit’s network along the East Coast and the Caribbean. Both are low-cost airlines that offer very low fares and make up some of the difference by charging extra for many things that the larger airlines include in the ticket price, including carry-on luggage and soft drinks.

JetBlue is not the same type of so called ultra low cost airline. Its base fares are generally higher than Frontier and Spirit, but it offers services they don’t, like free TV and free internet at every seat.

The ship was traveling between Ft. Lauderdale, Florida, and San José, Costa Rica.

JetBlue’s strength on the East Coast, including Florida, would mean a much larger overlap with Spirit. In a statement Tuesday, Frontier argued that would lead to less competition, higher fares and fewer options for travelers.

In addition, Frontier and Spirit are small enough that their deal will not be closely scrutinized by antitrust regulators, though several leading liberal Democrats in Congress have raised concerns about the merger with the Biden administration. The Justice Department and several states filed lawsuits last year to try to block a much more limited partnership between JetBlue and American Airlines; that challenge is pending.

An analyst covering airlines for CFRA Research said the Biden administration is more likely to oppose a JetBlue-Spirit deal than a Frontier-Spirit combination because it could lead to higher prices.

A JetBlue pilot had to be removed from the cockpit minutes before takeoff from an airport in upstate New York on Wednesday because he had a blood alcohol level more than four times the legal limit for flying, according to the reports.

However, he believes that JetBlue’s offer is superior, so “Spirit will probably take a chance and take JetBlue’s offer. It’s too much money to pass up.”

JetBlue is three times the size of Frontier and nearly twice the size of Spirit. It has failed in acquisitions before, having lost its bid for Virgin America to Alaska Airlines.

Frontier is controlled by private equity firm Indigo Partners, which once held a significant stake in Spirit.

One area where all three are similar: consumer complaints. Spirit had the highest rate of complaints to the US Department of Transportation last year, followed by JetBlue and Frontier.

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