Spirit Airline’s board of directors has rejected JetBlue’s offer to acquire the airline and will proceed with the existing merger agreement with Frontier, one of its ultra-low-cost competitors, Spirit announced in a press release† A deal with JetBlue has “a slim chance of gaining antitrust approval” and poses “an unacceptable level of closing risk” for its shareholders, Spirit notes.
After Frontier first announced its plans to buy Spirit in a $2.9 billion cash and stock deal in February, JetBlue followed up with an all-cash bid of $3.6 billion last month. The airline even offered to award a $200 million payout in case antitrust issues prevent the deal from going through. Despite all this, Spirit still rejected the deal, citing JetBlue’s North American Alliance (NEA) with American Airlines as its main concern.
in 2020, JetBlue and American Airlines Announced the NEA, an initiative to pool their services in New York City and Boston. The NEA wants to make it easier for passengers to board connecting flights from both airlines and should bring more routes to both cities. While both companies claim the NEA increases competition, the Department of Justice (DOJ) filed an antitrust complaint against the alliance last September, saying it will “not only eliminate significant competition in these cities, but also hurt air travelers across the country by significantly reducing JetBlue’s incentive to compete with America elsewhere, reducing an already strong concentrated industry is further consolidated.”
Spirit believes a deal with JetBlue would not allay the DOJ’s concerns and potentially benefit passengers. “We struggle to understand how JetBlue can believe that DOJ, or any court, will be convinced that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then makes an acquisition that would largest ULCC will eliminate. [ultra-low-cost carrier] airline,” Mac Gardner, Spirit Airline’s chairman of the board of directors, said in a letter to JetBlue.
Spirit’s deal with Frontier is expected to close in the second half of 2022. The deal will make Frontier/Spirit the fifth largest airline in the US.