Spirit Rejects JetBlue’s “Superior Proposal,” Moves Forward with Frontier

Joe Cortez May 02, 2022

After two merger proposals by JetBlue, Spirit Airlines has rejected the New York-based carrier’s offer, reaffirming their commitment to combine with Frontier Airlines.

Despite two proposals by Robin Hayes and JetBlue, Spirit Airlines says they will no longer entertain the offer and instead continue their merger with Frontier Airlines.

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, increasing the proposed purchase price to $33 per share purchase price and 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 featured a $200 million reverse break-up fee if the deal does not go through.

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.

JetBlue has not publicly commented on Spirit’s decision to move forward with Frontier.

Ed. Note: This article has been changed from the original version. JetBlue did not submit a third bid for Spirit Airlines, but rather released the details of the second bid on May 3, 2022 — the same day Spirit announced they would not accept JetBlue’s offer. The writer erred.