JetBlue increases offer to buy Spirit ahead of vote for merger with Frontier Airlines


Spirit has been lukewarm on merging with JetBlue, and at one point JetBlue even attempted a hostile takeover by appealing to Spirit shareholders to reject the existing deal with Frontier Airlines. FIle Photo by John Angelillo/UPI | License Photo

June 28 (UPI) — With Spirit shareholders set to vote on a merger with Frontier Airlines this week, JetBlue Airways is making a last-ditch effort to acquire the Florida-based budget carrier.

JetBlue pushed up its offer on Monday by increasing the breakup fee that would kick in if the deal doesn’t go through and prepaying for shares.

The move is the latest effort by JetBlue to acquire Spirit Airlines, which previously agreed to a merger deal with Frontier Airlines. JetBlue first offered to buy Spirit in April, just a few weeks after Frontier announced that it would buy Spirit.

Spirit, however, has been lukewarm on merging with JetBlue and at one point JetBlue even attempted a hostile takeover by appealing to Spirit shareholders to reject the Frontier deal.

Spirit shareholders are scheduled to vote this week whether to accept the Frontier agreement. Last week, Frontier also increased its offer to $4.13 per share, instead of the $2 per share it first offered.

In an open letter to Spirit shareholders on Monday, Frontier said that it increased its termination fee for the deal to $350 million and offered a prepayment $2.22 per share.

Frontier has cautioned Spirit shareholders that a merger with JetBlue would not pass regulatory scrutiny. File Photo by Paul Matthew Photography/Shutterstock

In the open letter, Frontier warned that a merger with JetBlue would not get by antitrust regulators.

“JetBlue has thrown up a lot of smoke to have you believe that the regulatory risk of its proposal is identical to the Frontier-Spirit combination,” the letter said. “That is not true, and requires you to ignore common sense and JetBlue’s own admission about what it intends to do immediately upon acquiring and eliminating Spirit: remove seats and raise prices, both antitrust non-starters.

“Conversely, a Spirit-Frontier merger is demonstrably pro-consumer, as many analysts and third parties have already acknowledged, given that it will expand ultra-low fare service to more destinations and provide more ultra-low fare alternatives to the Big Four and JetBlue.”

In response, New York-based JetBlue said that Frontier’s projection for the Spirit deal was “pie in the sky.”

“Spirit shareholders are being promised an unrealistic future value based on financial projections that are a house of cards given the realities of the market,” JetBlue said in a statement. “Among other things, they want you to believe in assumptions that fail to account for the actual market conditions they would face, including the need for pilot pay increases and elevated fuel costs.”

The Spirit shareholder vote is scheduled for Thursday.

Whichever carrier Spirit merges with, the deal will produce the fifth-largest airline in the United States.



Read original article here

Denial of responsibility! WebToday is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment