Jetblue has made a US$3.6 billion ($4.8 billion) bid to acquire Spirit Airlines, potentially derailing Frontier’s US$2.7 billion ($3.6 billion) merger deal with the low-cost carrier.
Jetblue submitted a proposal to Spirit’s board of directors on Monday to acquire the airline for $33 per share in cash, which the airline said it firmly believes constitutes a “superior proposal” to Spirit’s merger agreement with Frontier.
Like Frontier, Jetblue plans to merge with Spirit to create “the most compelling national low-fare challenger to the four large dominant U.S. carriers”.
“When we grow and introduce our unique value proposition onto new routes, legacy carriers lower their fares and customers win with more choice,” Robin Hayes, JetBlue CEO said.
“The combination of JetBlue and Spirit – coupled with the incredible benefits of our Northeast Alliance with American Airlines – would be a game-changer in our ability to deliver superior value on a national scale to customers, crewmembers, communities, and shareholders.
“The transaction would accelerate our strategic growth and create sustained, long-term value for the stakeholders in both companies.”
In February, Spirit agreed to merge with Frontier in a deal that would create the fifth-largest US airline.
Headed by Frontier, the proposal boosted Spirit’s share price by 18.7 per cent, though some analysts questioned whether the airlines could obtain regulatory approval.
Spirit said its board of directors would work with its financial and legal advisors to evaluate JetBlue’s proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders.
Frontier said in a statement that if Jetblue’s offer is accepted, it would limit options and harm consumers, according to the New York Times.
JetBlue’s proposal is expected to attract scrutiny as the Biden administration cracks down on mergers that could reduce competition and increase prices, according to Reuters.
Hayes told investors that JetBlue is counting on its reputation for lowering fares and increasing competition but expects a lengthy regulatory process.
Image: iStock/Devasahayam Chandra Dhas