Tag Archives for spirit airlines.
I find travel on Spirit to be a value but I am not likely to fly them in the next 3 months, and certainly not enough to requalify after the 3 month status match, so won’t pursue this myself – but several of you will find this helpful.
Yesterday Spirit Airlines shareholders rejected an agreement to sell to Frontier with JetBlue offering far more money.
Now Spirit’s board has agreed to sell to JetBlue under the same terms as the New York-based carrier’s last offer – a price 40% higher than Frontier was offering at the time it was made a month ago.
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.
JetBlue wants Spirit Airlines shareholders to vote against merging with Frontier Airlines. They’ve reiterated their offer of more money to buy Spirit. They’ve reduced their offer from $33 to $30 per share but are dangling an additional 10% – back up to $33 per share in cash – subject to negotiation and due diligence.
JetBlue’s offer is for substantially more money. It does not provide greater certainty, as they claim, though. There is more regulatory risk though it’s difficult to evaluate exactly how much. There should be a path to solve this though through negotiation if JetBlue is as confident in closing the transaction as they claim: a higher breakup fee.
We hear about stories of passengers beating up flight attendants, flight attendants having disputes with their airline or union, and flight attendants scolding customers. Maybe they’re kicking off passengers for their attire or – for much of the pandemic – over mask violations.
Most of the time, though, interactions between customers and cabin crew are genuine and human. We just don’t hear about it.
Spirit’s rejection was a gift to JetBlue which was already offering to overpay for Spirit. The “winner’s curse” was in effect, Since the market knows what Spirit is worth, in order to ‘win’ JetBlue was having to overpay. And indeed, Spirit is worth less to JetBlue than it is to Frontier.
JetBlue’s revised offer, unfortunately for their shareholders, was the same amount of money while extracting less value from the deal.
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 »
