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Sunday, August 14, 2022

Spirit Airlines rejects JetBlue’s offer and moves on with its merger with Frontier Airlines

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Spirit Airlines (S64) (SAVE) has turned down Jetblue’s counteroffer to merge with Frontier.

On February 7, 2022, Frontier and Spirit Airlines (S64) (SAVE) announced plans to unite to form an “aggressive ultra-low-fare rival” in the US aviation sector.

JetBlue (JBLU) made an unsolicited $3.6 billion cash purchase approach for Spirit on April 6, 2022. On May 2, 2022, it added divestment commitments and a $200 million reverse breakup fee in an attempt to strengthen its position.

However, it appears that this was insufficient to persuade the ultra-low-cost carrier. Spirit stated its intention to proceed with the Frontier merger in a statement released on May 2, 2022.

“After a thorough review and extensive dialogue with JetBlue (JBLU), the Board determined that the JetBlue (JBLU) proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders,” Spirit Chairman Mac Gardner said in the statement. “Spirit continues to believe in the strategic rationale of the proposed merger with Frontier and is confident that it represents the best opportunity to maximize long-term shareholder value.”

Frontier and Spirit both predict annual revenues of around $5.3 billion by 2021, based on the combined company’s potential growth.

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