JetBlue’s offer involved paying more but undermining Spirit’s low cost advantage and walking away from their more profitable business model. Instead JetBlue wanted Spirit for its planes, pilots, gates and slots.
However Spirit says that even though JetBlue was willing to pay more, they believe there’s a strong chance the deal would never go through. This is clearly because of expected opposition by the federal government on anti-trust grounds.
- There have been concerns expressed over Frontier-Spirit, but would mean more planes operating under a low cost model than if Spirit were swallowed by JetBlue (which plans to walk away from the ultra low cost model for Spirit).
- There’s a chance that JetBlue’s acquisition would be approved in exchange for the New York-based carrier walking away from its joint venture with American.
I view Spirit-Frontier as better for customers. More low cost flights are better even if you do not fly either airline since that’s more competition for legacy carriers, driving down price.
And while I have strong reservations about joint ventures generally, I believe that the American-JetBlue tie-up (separately being litigated by the federal government) is good for consumers because it creates a viable third competitor in the New York market.
I’d expect lawsuits, and JetBlue can still move forward with a tender offer.