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JetBlue wants to buy Spirit for parts – gates, slots (though they’d divest many of those), pilots and planes. And they’re willing to pay $400 million for the chance to get the deal to close in the face of government opposition.
Meanwhile the most likely way to get regulatory approval is to trade the American Airlines joint venture, which the federal government is also opposing. If they can make that deal quickly, they can presumably have Spirit.
Spirit Airlines sent me their release indicating that tomorrow will not be the day that shareholders vote on whether to sell to Frontier Airlines.
Instead the shareholder meeting will be adjourned and reconvened on July 8. Spirit wouldn’t do this if all their ducks were lined up to gain approval for the Frontier deal that their board has endorsed.
JetBlue’s proposed deal to acquire Spirit Airlines is better for Spirit shareholders than Frontier’s is. Spirit management supports the Frontier deal, and it will probably be approved. JetBlue is offering 40% more for Spirit Airlines than Frontier is. With Spirit’s shares falling to slightly below Frontier’s offer, the market thinks the successful suitor will be Frontier, not JetBlue.
However a Frontier deal for Spirit is actually better for consumers, even though JetBlue’s product is better than the one offered by either airline.
When Frontier Airlines raised its offer to buy Spirit Airlines and gave the Spirit Airlines board cover to again endorse a merger between the two airlines (walking away from a much bigger offer from JetBlue that faces greater anti-trust scrutiny) it seemed like game over. The new offer even got the endorsement from two independent proxy advisory firms.
JetBlue isn’t done though. They’ve come out with a new, increased offer in advance of Thursday’s Spirit Airlines shareholders meeting, a last ditch effort.
Frontier Airlines increased its offer by $2 per share to acquire Spirit, and the Spirit Airlines board unanimously recommends it over JetBlue’s more lucrative – but regulatorily more risky – offer. That’s still less than the closing price of Spirit Airlines stock on Friday.
Spirit Airlines announced that their board has unanimously rejected JetBlue’s offer to pay more for the airline than Frontier, with whom the ultra low cost carrier had entered into a sale agreement.
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.
One of the major drawbacks of the ‘low cost carriers’ has been that they didn’t set up the ability to put you on another airline when your flight cancels. However Spirit Airlines and Frontier, which are merging, have been flipping the script. And Frontier may have the best cancelled flight approach of any airline now.
Spirit Airlines is being taken over by Frontier. The two large ultra low cost carriers in the U.S. are merging, if the U.S. government allows it, bringing together the primary drivers of lower fares and disaggregated service in the domestic market.
This morning’s Frontier Airlines operational meltdown – on the day of the merger announcement – may not be a good omen.
Spirit Airlines and Frontier Airlines have announced that they are merging. Combined they’ll offer 1000 daily flights and serve 145 destinations in the U.S., Caribbean, and Latin America and the transaction is expected to close in the second half of 2022.
This is effectively Frontier taking over Spirit for three reasons.
Frontier Airlines re-launched their credit card and their elite program four years ago and did something that at the time was revolutionary: a dollar spent on the card earned an elite qualifying mile. But Frontier did something bigger in 2021 and somehow I missed it. All spend over 20,00 per calendar year counts double towards elite status now.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
