Spirit Airlines rejects JetBlue's offer - New Style Motorsport

Spirit Airlines on Monday rejected a takeover bid from JetBlue Airways, saying regulators were unlikely to approve the proposal.

In a letter to JetBlue, Spirit executives said they had determined the JetBlue takeover offer was unlikely to be approved while that airline’s recently announced partnership with American Airlines was in place. A recent communication from JetBlue “makes it clear” that the airline is unwilling to end that partnership, known as the Northeast Alliance, Spirit said in the letter. The Justice Department and several states have sued to block the JetBlue-American partnership, saying it is anticompetitive.

In a statement, Spirit Chairman Mac Gardner said the company stood by its plan to merge with Frontier Airlines, a deal that predates the JetBlue offer and that Spirit says represents the best interests of shareholders in the long run. term.

“After a thorough review and extensive dialogue with JetBlue, the board determined that JetBlue’s proposal involves an unacceptable level of closure risk that would be borne by Spirit shareholders,” said Mr. Gardner. “We believe our pending merger with Frontier will start an exciting new chapter for Spirit and provide many benefits to Spirit shareholders, team members and guests.”

Spirit and Frontier, both low-fare carriers, had announced a plan to merge in February. Then JetBlue stepped in with a higher offer for Spirit last month. Both deals would face scrutiny from regulators in the Biden administration, who have expressed more skepticism about consolidation than their predecessors.

Some analysts argue that Spirit and Frontier are better suited to merge because they operate under a similar “ultra-low-cost” business model but have longer flights in different parts of the United States. A JetBlue-Spirit combination could be harder to pull off because the airlines’ business models are quite different. But the deal could allow JetBlue to compete more effectively against the country’s four dominant carriers.

Spirit said regulators would likely be “very concerned” that JetBlue’s offer would result in higher costs and consequently higher fares for consumers. For example, Spirit said converting Spirit planes, which are densely packed with seats, to JetBlue’s roomier configuration would result in higher prices.

In its response Monday, JetBlue said it would offer to sell Spirit’s assets in New York and Boston, two markets that regulators have raised concerns about in its lawsuit seeking to kill the Northeast Alliance. JetBlue also argued that both its offer and the Frontier deal shared “a similar regulatory profile” but that Frontier has not offered to sell assets or pay a breakup fee. JetBlue also said the value of the Frontier cash-and-stock deal has vanished due to the drop in that airline’s stock price.

“Spiritual shareholders would be better off with the certainty of our substantial cash premium, regulatory commitments and reverse breakage fee protection,” JetBlue Chief Executive Officer Robin Hayes said in a statement Monday.

JetBlue accused Spirit of failing to give it sufficient access to data about the low-cost carrier’s business while requesting “unprecedented commitments” from JetBlue.

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