NEWS: Spirit Airlines REJECTS JetBlue Takeover Offer

The situation with Spirit Airlines, Frontier Airlines, and JetBlue Airways just got a little more interesting. No idea what we’re talking about? Allow us to explain.

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Earlier this year, we shared that Frontier Airlines and Spirit Airlines had plans to merge to create “America’s most competitive ultra-low fare airline.” But things got a little more complicated when JetBlue Airways entered the situation and made an offer to BUY Spirit Airlines. How could that offer impact the Spirit and Frontier merger? What will Spirit Airlines do? Well, we’ve finally gotten a big update.

According to CNBC, Spirit Airlines has REJECTED JetBlue’s $3.6 billion offer to take over the airline. According to CNBC, Spirit rejected the offer because they felt it had “a low likelihood of winning approval from government regulators.”

Spirit Airlines Safety Documents

In a letter sent from Spirit to JetBlue’s CEO, Spirit indicated, “We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue’s Northeast Alliance (NEA) with American Airlines remains in existence.” (CNBC)

According to CNBC, back in September, the Justice Department and 6 states sued to “unwind JetBlue and American Airlines’ ‘Northeast Alliance’ partnership.” They alleged that the agreement between JetBlue and American Airlines would “lead to higher fares in busy northeastern U.S. airports.” (CNBC)

Seats on Spirit Airlines

Spirit Airlines has said that it thinks the Justice Department and a court would be “concerned” that “a higher-cost/higher fare airline would be eliminating a lower-cost/lower fare airline in a combination that would remove about half of the ULCC (ultra low cost carrier) capacity in the United States.” (CNBC)

In a letter sent from Spirit to JetBlue back on April 25th, Spirit even proposed “requiring JetBlue to take any action required to obtain regulatory clearance, which specifically included abandoning the NEA at closing.” (CNBC)

Spirit has noted that because of this “substantial completion risk,” they think that JetBlue’s offer is “illusory, and Spirit’s board has not found it necessary to consider it.” (CNBC)

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According to The Orlando Sentinel, Spirit airlines and Frontier actually rank as the second and third busiest airlines in Orlando’s airport. Spirit has determined, however, that JetBlue’s offer “is not reasonably capable of being consummated.”

In the letter sent to JetBlue, Spirit noted that the JetBlue offer had “‘an unacceptable level of closing risk’ that shareholders would have to take on.”

Spirit’s board continues to support the bid from Frontier, however, and reportedly anticipates that the deal with Frontier will close in the second half of this year.

Airplane

JetBlue has responded to the rejection by “enhancing” its offer and has promised a $200 million “reverse break-up fee” if the deal doesn’t ultimately go through because of antitrust reasons. (CNBC)

JetBlue has also said that it would offer a “remedy package to address regulatory concerns.” That remedy package would include  “the divestiture of all Spirit assets in New York and Boston so that JetBlue does not increase its presence in the airports covered by the NEA. The package would also include gates and assets at other airports, including Fort Lauderdale.” (CNBC)

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In a press release shared by JetBlue, JetBlue discusses its enhancements to the deal, how its deal offers a “superior, all-cash premium,” and how Spirit shareholders would reportedly have to assume some risks if the Frontier deal goes forward.

Robin Hayes, the CEO of JetBlue said, “By creating a national competitor to the Big Four airlines, this transaction would deliver meaningful benefits for customers, superior value for shareholders of both airlines, and new opportunities for our combined crewmembers…We have confidence that we can complete this transaction to bring more low fares and great service to more customers. A JetBlue-Spirit combination will deliver enhanced financial strength and accelerate revenue growth and profitability for JetBlue shareholders.”

Philadelphia Airport

JetBlue’s offer (which comes in at $33 per share price, plus those new “enhancements”) is higher than Frontier’s offer of $22.44 per share.

Of course, the situation with these offers and potential deals is subject to change in the future. We’ll continue to keep an eye out for updates and let you know what we find. Check back with us for the latest news.

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The post NEWS: Spirit Airlines REJECTS JetBlue Takeover Offer first appeared on the disney food blog.

source https://www.disneyfoodblog.com/2022/05/02/news-spirit-airlines-rejects-jetblue-takeover-offer/

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