Skift Travel News Blog

Shareholder group Institutional Shareholder Services (ISS) is advising investors in Spirit Airlines to vote against a proposed merger with Frontier Airlines.

“The proposal from JetBlue appears to represent a superior alternative,” ISS said in a report Friday. “Shareholders are therefore recommended to vote AGAINST the proposed merger with Frontier.”

The recommendation is a reverse of ISS’ last advisory for a Frontier merger on June 24.

Frontier CEO Barry Biffle, in a letter to Spirit CEO Ted Christie on July 10, said they were “very far” from garnering shareholder support for the Spirit-Frontier combination. He added that Frontier would not “propose any further modifications to the financial terms” of its merger proposal, which was valued at roughly $2.4 billion in cash and stock at the end of June.

JetBlue’s all-cash offer is valued at nearly $3.8 billion, including a $400 million reverse break-up fee.

Spirit, while it continues discussions with both Frontier and JetBlue, has repeatedly backed a merger with Frontier citing lower regulatory approval risk. The main concern is JetBlue’s unwillingness to offer to end its alliance with American Airlines in the northeast in exchange for antitrust approval. JetBlue has offered to divest all of Spirit’s assets in Boston and New York — the two markets covered by the American alliance — as well as gates at the Fort Lauderdale airport.

Spirit shareholders are scheduled to vote on the Frontier proposal on July 27.

Spirit Airlines has delayed — for a fourth time — a key shareholder vote on its proposed merger with Frontier Airlines, and by extension a hostile offer from JetBlue Airways.

The vote will now occur on July 27, nearly two-weeks later than the current July 15 date. Frontier CEO Barry Biffle asked Spirit to delay the vote on July 7, saying the airline’s offer was “very far” from shareholder approval.

In a letter to staff Wednesday, Spirit CEO Ted Christie acknowledged that the delay was in response to Frontier’s request. “There has been no change to our position at this time — the Spirit board has reiterated its commitment to the Frontier transaction and strongly recommends stockholders vote for the merger,” he said. Christie added that discussions continue with both Frontier and JetBlue.

JetBlue has wooed Spirit shareholders with its larger upfront cash offer for Spirit. The New York-based airline is offering a total of nearly $3.8 billion in cash for the carrier, whereas Frontier’s cash-and-stock offer totaled roughly $2.4 billion on June 27, according to a recent Raymond James analysis. Biffle, in his July 7 letter, said the airline does not intend to up its offer.

Frontier Airlines CEO Barry Biffle wants to make a deal for Spirit Airlines. But, in a letter sent to the CEO of Spirit Sunday, is concerned about the lack of support from both Spirit management and its shareholders.

“We still remain very far from obtaining approval from Spirit stockholders,” Biffle said in his letter to Spirit CEO Ted Christie and General Counsel and Secretary Thomas Canfield. He noted Spirit’s decision on July 7 to delay — again — a key shareholder vote on the Frontier deal by a week to July 15. Biffle requested an additional postponement of the vote to July 27.

Frontier, and its primary shareholder private equity firm Indigo Partners, does not intend to modify its latest offer that was made on June 24, Biffle added. The cash and stock deal is valued at roughly $2.4 billion, whereas JetBlue’s all-cash offer at nearly $3.8 billion, according to a Raymond James analysis.

“We also believe that the proxy solicitation process would unquestionably benefit from the board of directors of Spirit expressly reaffirming its recommendation of the pending merger with Frontier,” Biffle said. He asked that Spirit publicly back Frontier’s offer again within 10 days, or by July 20.

“Our proposed combination is not only pro-competitive — making it possible to bring ultra-low fares to more routes in competition with larger, high-cost, high-fare airlines — our offer delivers significantly greater value to Spirit stockholders,” Biffle reiterated in the letter.

Frontier and Spirit unveiled plans to merge in February, but the mutually agreed to deal was disrupted by an unsolicited bid from JetBlue Airways in April. The result has been a bidding war where, despite Spirit’s repeated support for the Frontier deal, JetBlue’s greater cash offer — regardless of regulatory approval risks — has repeatedly appeared to have the support from Spirit shareholders.

Spirit Airlines’ two-and-a-half year saga to expand at Newark Liberty International Airport has a happy ending. Late on Tuesday, the U.S. Department of Transportation awarded the discounter 16 peak “runway timings” — in short, rights to takeoff and land at an airport during a given hour — that Spirit sued for in December 2019.

The DOT said the award of the timings, which were only available to budget airlines, would boost “low-cost service options” and improve competition at the New York City-area airport. Alaska Airlines and JetBlue Airways also sought the takeoff and landing rights, according to the regulator.

Newark is a major hub for United Airlines, which operates more than 70 percent of all flights at the airport. The timings were previously used by Southwest Airlines until the carrier ended flights to Newark in 2019. And Southwest acquired them in 2010 as a condition of United’s merger with Continental Airlines.

The award comes amid a three-way war of words between JetBlue, Spirit, and United over congestion at Newark. JetBlue and Spirit blame United, and the Federal Aviation Administration, for over scheduling the already congested airport, whereas United has repeatedly made the argument that its much smaller competitors were the problem. In June, United cut its schedule at Newark by roughly 50 daily flights from July 1 through the end of the summer to combat delays.

In an interesting twist, the DOT may need to re-award the timings if JetBlue wins its hostile bid for Spirit. The former carrier has pledged to divest all of Spirit’s assets in Boston and New York — including Newark — if shareholders approve its plan over a competing proposal from Frontier Airlines. Spirit shareholders vote on the Frontier proposal Friday.

For all who hoped for some resolution to the months-long saga over the future of Spirit Airlines on June 30, no go. The carrier has postponed a shareholder vote on a merger with Frontier Airlines to July 8.

Spirit will immediately open and close the June 30 meeting with no vote in order for its board to “continue discussions” with both preferred suitor Frontier and hostile bidder JetBlue Airways, the Florida-based discounter said late Wednesday. This is the second time Spirit has delayed a shareholder vote, which was first scheduled for June 10.

Frontier is offering shareholders $4.13 plus 1.91 of its own shares for each Spirit share plus a $350 million reverse break-up fee, while JetBlue is offering at least $33.50 per share to up to $34.15 a share based on certain conditions and a $400 million break-up fee. All in, Frontier’s offer is worth $2.4 billion and JetBlue’s nearly $3.8 billion, according to an analysis by Raymond James.

The resulting airline from either a Spirit-Frontier or Spirit-JetBlue merger will be the fifth largest in the U.S. with a roughly 8 percent share of the market.

JetBlue Airways is not done yet trying to acquire Spirit Airlines. With just three days until shareholders vote, the New York-based carrier has upped its offer again, raising its reverse breakup fee to $400 million to beat rival bidder Frontier Airlines.

JetBlue’s latest offer — its fourth for Spirit — also includes a prepayment of $2.50 per share of the breakup fee, and a “ticking fee mechanism” where the airline would pay Spirit shareholders an additional $0.10 per share monthly from January 2023 until the deal closed, JetBlue said Monday. The ticking fee could increase JetBlue’s overall offer to as much as $34.15 per share. Its last offer was for $33.50 per share plus a $350 million breakup fee.

“We’ve discussed our offer directly with Spirit shareholders and are now modifying our proposal in response to shareholders’ expressed interest, to include a monthly payment for shareholders, with the certainty of a significant cash premium at closing,” JetBlue CEO Robin Hayes said Monday.

And, in a letter directly to Spirit shareholders, Hayes said the airline’s board has “never negotiated with us and have now favored a transaction that better serves Frontier’s controlling shareholder than Spirit’s shareholders.”

Frontier’s latest offer, unveiled on June 24, included an additional $2 per share for a total of $4.13 a share, plus a $350 million reverse break up fee. The offer was valued at $2.7 billion based on closing stock prices that day.

Spirit shareholders will vote to accept or reject Frontier’s offer on June 30.

With the likelihood improving of a successful bid for Spirit Airlines, JetBlue Airways has raised its offer for the discounter a second time in as many weeks.

The New York-based airline is now offering Spirit shareholders $33.50 per share, or a total of $3.7 billion, JetBlue said Monday. That is a $2 per share improvement over its last offer of $31.50 a share that it made on June 6, and $0.50 more than it initial offer in April of $33 per share.

“After discussions with the Spirit team last week and further due diligence review, we are more convinced than ever that a JetBlue-Spirit transaction would create a true national competitor to the Big Four and deliver value to all of our stakeholders,” JetBlue CEO Robin Hayes said.

“Our previous proposal was met with an extremely positive reaction from Spirit stockholders, and we believe they will be even more pleased with these improved terms, including additional regulatory commitments that reflect our confidence in our ability to obtain antitrust approval and are a direct result of our diligence,” Hayes added.

With regulatory approval the top of concern of Spirit’s leadership team, JetBlue reiterated its commitment to divest all of Spirit’s assets in Boston and New York, as well as gates at the Fort Lauderdale airport where both airlines have bases. The airline told Spirit’s board Monday that it would “not increase its presence in the airports covered by our Northeast Alliance” with American Airlines if the deal occurs.

Spirit has twice rejected JetBlue favoring, instead, its preferred merger partner Frontier Airlines. However, after JetBlue’s last offer, Spirit gave the carrier the same level of access to due diligence data that it had granted Frontier — something JetBlue had been seeking for months.

Denver-based Frontier declined to improve its offer, which totals roughly $2.9 billion in cash and stock, after JetBlue raised its bid on June 6.

A JetBlue-Spirit merger would create the fifth largest U.S. airline.

Days after J.P. Morgan published a report stating the likelihood of a merger between Spirit Airlines and JetBlue Airways was improving, Spirit has said its board of directors was “engaging in discussions” with JetBlue following its improved offer.

The board was also continuing to work with Frontier under the terms of the existing merger agreement with Frontier, Spirit president and CEO Ted Christie said Tuesday.

“As part of this process, Frontier and JetBlue are being given access to the same due diligence information, on the same terms. The board expects to bring the process to a conclusion and provide an update to stockholders ahead of the special meeting of Spirit stockholders scheduled for Thursday, June 30, 2022,” it said in a statement.

Spirit had previously delayed that key shareholder vote on a merger — either with Frontier Airlines or JetBlue — by three weeks.

“Spirit continues to be bound by the terms of its merger agreement with Frontier, under which a ‘Superior Proposal’ is defined as being both reasonably capable of being consummated and more favorable to Spirit’s stockholders from a financial point of view,” the statement added.

A new report from J.P. Morgan analyst Jamie Baker sees the likelihood of a merger between JetBlue Airways and Spirit Airlines improving. The comments come days after JetBlue improved its offer for Spirit by more than $150 million, and the latter delayed a key shareholder vote on a merger — either with Frontier Airlines or JetBlue — by three weeks to June 30.

“We believe some merger involving Spirit is a high probability outcome,” Baker wrote Thursday. “We also believe a merger outcome between Spirit and JetBlue is a growing probability and may overtake the likelihood of a Frontier deal.”

JetBlue is offering Spirit shareholders $31.50 per share that totals roughly $3.4 billion. The offer includes a $1.50 per share prepayment of a $350 million break up fee in the event U.S. regulators do not approve the deal. Frontier is offering Spirit investors the equivalent to $2.9 billion in cash and stock.

On June 6, following receipt of JetBlue’s improved offer, Frontier declined to raise its bid for Spirit, Securities & Exchange Commission filings show.

Spirit Airlines shareholders have another 20 days to decide whether they support a merger with Frontier Airlines or prefer a hostile, but potentially more lucrative if it’s approved by regulators, takeover by JetBlue Airways. The vote was previously scheduled for Friday, June 10.

Florida-based Spirit said Wednesday that the delay to June 30 allowed the airline’s board to “continue discussions” with shareholders, Frontier, and JetBlue.

On Monday, JetBlue improved its offer to Spirit shareholders by more than $150 million to an all-cash $3.4 billion. Frontier is offering shareholders the equivalent to $2.9 billion in cash and stock.

Whoever Spirit decides to merge with, Frontier or JetBlue, will become the fifth largest U.S. carrier after American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines.