JetBlue to Spirit Shareholders: Just Say No!
Joe Cortez May 17, 2022
In a press release and website targeted at shareholders – JetBlueOffersMore.com – the New York-based airline is urging Spirit shareholders to vote against the announced merger with Frontier Airlines.
JetBlue: “We Urge Spirit Shareholders to Vote ‘AGAINST’ Frontier’s Inferior Offer”
At the beginning of May 2022, Spirit executives rejected a proposal by JetBlue to purchase the ultra-low-cost carrier, claiming it did not meet the requirements of a “Superior Proposal.” In the letter, Spirit leadership cited potential difficulties in getting their deal approved by either the U.S. Department of Justice or Department of Transportation, due to JetBlue’s formation of the Northeast Alliance with American Airlines. That partnership is currently under investigation by the Justice Department.
However, that isn’t stopping JetBlue from pursuing the merger, potentially through a hostile takeover. In their argument straight to shareholders, airline chief executive Robin Hayes accuses Spirit of not providing diligence information when they submitted their offer, along with rejecting the proposal based on “unsupportable claims that are easily refuted.”
“JetBlue offers more value – a significant premium in cash – more certainty, and more benefits for all stakeholders,” Hayes writes in the letter. “Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their own regulatory challenges.”
Moreover, JetBlue claims that the merger is rooted in a conflict of interest led by Indigo Partners, the former controlling shareholder of Spirit and current controlling shareholder of Frontier. Leaders for JetBlue allege that after eight months of negotiations, the Frontier merger would represent a lower sale level for shareholders, limited governance and no regulatory divesture commitment.
“Until 2013, Spirit Airlines was owned and led by Bill Franke’s Indigo Partners, the controlling shareholder of Frontier and the entity driving the Frontier-Spirit combination,” the website reads. “Spirit’s Board has deep conflicts of interest with multiple directors involved in the process appointed by Indigo Partners and 5 directors promised Board seats in a combined Frontier-Spirit.”
JetBlue is now urging shareholders to vote against the proposed merger at the shareholders special meeting on June 10, 2022. On their special website, JetBlue argues that a “No” vote would force Spirit executives to reconsider JetBlue’s bid, which includes a higher price per share than Frontier is offering, along with a reverse break-up fee if the takeover doesn’t get through government review.
Frontier-Spirit Merger Hinges on Shareholder Approval
Frontier and Spirit announced their plans to move forward with the $6 billion merger in February 2022, combining the two airlines to create the nation’s largest ultra-low-cost carrier. The Spirit board recommends the shareholders approve the proposal.
Boy Jetblue is really sounding desparate to acquire a garbage airline and add to their already demonstratable inability to handle operations.
I fear this will do to Jet Blue what the Northwest Merger with Republic and Pan Am's merger wih National did, lower the ariline's quality and over extended it's operations. In the latter case it put Pan Am on the road to bankruptcy having to compete in the cuttrhorat domestic environemnt that existed after deregulation.