Future of Spirit Airlines Remains Uncertain; Board Favors Frontier Offer

Whether Spirit Airlines is sold to Frontier Airlines or JetBlue remains up in the air; however, the board of directors for Spirit recently reiterated its recommendation that stockholders vote in favor of the merger with Frontier.

Back in February, it was announced that the low-cost airlines Frontier and Spirit were merging. The combined airlines would offer 1,000-plus daily flights to over 145 destinations in 19 countries. The airlins would also expand with more than 350 aircraft on order and eventually combining frequent flyer and membership offerings. The deal was expected to close in the second half of 2022.

In April, JetBlue submitted a proposal to the Spirit board of directors that reportedly represented a premium of 52 percent to Spirit’s undisturbed share price on February 4 (Frontier’s bid), and a premium of 50 percent to Spirit’s closing share price on April 4 (JetBlue’s bid).

The combination of Spirit and either of the other two airlines would make it the fifth largest in the U.S., trailing only American, Delta, United and Southwest Airlines.

In early May Spirit’s board of directors unanimously determined that the unsolicited proposal received from JetBlue did not constitute a “superior proposal” as defined in Spirit's merger agreement with Frontier Group Holdings, Inc. "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," said Mac Gardner, chairman of the board of directors for Spirit Airlines, at the time. "After a thorough review and extensive dialogue with JetBlue, the board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders. We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, team members and guests."

This week, both airlines made statements regarding the offer.

"JetBlue's tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders," said Gardner. "Based on our own research and the advice of antitrust and economic experts, our view is that the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution. In that scenario, a $1.83 per share reverse break-up fee will not come close to adequately compensating Spirit stockholders for the significant business disruption Spirit will face during what JetBlue acknowledges will be a protracted regulatory process. Our pending merger with Frontier is advancing as planned, and we continue to recommend that Spirit stockholders vote FOR the merger with Frontier on June 10th, as we believe the combination of these two ULCCs is the best way to deliver maximum value to Spirit stockholders."

In its own statement, JetBlue added, “It’s no surprise that Spirit shareholders are getting more of the same from the Spirit Board. The Spirit Board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.

“Regarding regulatory approval, Spirit would have you ignore the current regulatory climate to think that approval of their Frontier deal is assured. That is simply not true. Both deals are subject to regulatory review, and both deals have a similar risk profile. Spirit shareholders recognize that and are showing great interest in hearing more about our superior offer and the regulatory commitments and protections we have made, including a reverse break-up fee.”

Barry Biffle, president and CEO of Frontier, for his part, added, “We are pleased that the Spirit board of directors has again reaffirmed its commitment to combining with Frontier, which increases competition by bringing more ultra-low fares to more travelers and delivering substantial shareholder value. We are working with Spirit to complete our merger and create a true nationwide ultra-low fare airline to compete against the dominant ‘Big Four’ airlines and other high-cost airlines, including JetBlue. Together, we will super-charge the ultra-low-cost carrier model and create an even better option for consumers.

Related Stories

Air France Unveils Redesigned Business Class Seats

Breeze Airways Announces Debut Service From Utah

Qantas to Update Narrow Body Jets, Orders 20 Airbus Aircraft

United Resumes Flights Between San Francisco and Melbourne