Skift Travel News Blog

JetBlue Airways has raised its bid to takeover Spirit Airlines in the latest volley in an escalating proxy war with Frontier Airlines.

JetBlue upped its reverse break-up fee on Monday to $350 million — $100 million more than Frontier — and offered to pre-pay $164 million of said fee in its latest offer to Spirit shareholders. All in, the offer values Spirit at $31.50 per share.

The offer comes less than a week after Frontier improved its offer for Spirit with a $250 million reverse break-up fee.

“Combining JetBlue and Spirit would create a true national competitor to the dominant legacy carriers, delivering low fares and a great experience for more customers, more opportunities and good paying jobs for crewmembers and team members, and more value for stockholders,” JetBlue CEO Robin Hayes said in a letter to the Spirit board. “The key features of our improved proposal – the up-front cash payment and increased reverse break-up fee – are not an illusion. This offer reflects the seriousness of our commitment and underscores our confidence in completing this transaction. Additionally, given the similar regulatory risks of the two transactions and the increased reverse break-up fee we are prepared to provide, we believe our Improved Proposal remains a Superior Proposal by any measure.”

Spirit shareholders are scheduled to vote on the Frontier merger proposal on June 10. The vote is the culmination of a four-month saga since Frontier and Spirit first announced plans to merge. JetBlue unveiled an unsolicited bid for Spirit in April, which the latter carrier rejected. JetBlue is now attempting a hostile takeover by asking Spirit shareholders to reject the Frontier deal.

The board at Spirit Airlines took little time in weighing in on JetBlue Airways’ hostile takeover bid. The New York-based carrier’s latest $30-per-share offer “is NOT in the best interests of Spirit and its stockholders,” the board said Thursday.

“JetBlue’s tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders. Based on our own research and the advice of antitrust and economic experts, our view is that the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution,” said Mac Gardner, Chairman of the Board of Directors for Spirit Airlines, in a statement.

JetBlue fired back with its own statement: “The Spirit board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier. Regarding regulatory approval, Spirit would have you ignore the current regulatory climate to think that approval of their Frontier deal is assured. That is simply not true. Both deals are subject to regulatory review, and both deals have a similar risk profile.”

JetBlue launched its hostile takeover on May 16, nearly two weeks after the Spirit board rejected an unsolicited offer from the airline. The Spirit board supports a merger with Frontier Airlines, which shareholders will vote on on June 10. The Frontier-Spirit combo also has the backing of both airlines flight attendant union.

The flight attendant unions representing cabin crew members at Frontier Airlines, JetBlue Airways, and Spirit Airlines are backing a merger of Frontier and Spirit, or at least opposing JetBlue’s hostile takeover attempt of Spirit.

The Association of Flight Attendants-CWA (AFA), which represents flight attendants at Frontier and Spirit, said May 17 that it had reached a merger transition agreement with Frontier. The agreement would oversee the integration of cabin crew groups at Frontier and Spirit if the merger goes ahead.

“We are thrilled to announce our support for the merger of Spirit and Frontier Airlines after reaching a transition agreement that protects flight attendant jobs,” AFA International President Sara Nelson said. “We support the necessary regulatory approvals that will improve competition, increase consumer options and experience, and maintain and grow good union jobs.”

On Wednesday, the Transport Workers Union (TWU), which represents flight attendants at JetBlue, came out firmly against the New York-based airline’s hostile takeover attempt. “After thoughtfully considering the impact that a JetBlue acquisition of Spirit Airlines would have on customers and our workforce, the TWU fully opposes JetBlue’s proposed hostile takeover. JetBlue has proven itself to be an abusive employer by disregarding the well-being of its workforce, and refusing to abide by its existing union contracts,” TWU International President John Samuelson said.

Spirit shareholders will decide the fate of the airline. They are scheduled to vote on a combination with Frontier on June 10, which the Spirit board supports and JetBlue opposes through a separate tender offer.

JetBlue has commenced a hostile all-cash takeover bid for Spirit Airlines, according to reports, just days after the airline rejected an offer from it. JetBlue earlier offered $33 per share, and is now in a takeover battle for Spirit with Frontier. JetBlue said its deal would help better compete with the legacy airlines that control nearly 80 percent of the passenger market.

JetBlue said on Monday it had filed a “Vote No” proxy statement, urging Spirit shareholders to vote against the planned merger with Frontier, Reuters said.

In an open letter to Spirit shareholders, published Monday, JetBlue said it was confident it would win regulatory approval.

“Our recent economic analysis, using Department of Transportation Data, shows JetBlue’s presence on a nonstop route decreases legacy fares by ~16%, about three times as much as the presence of an ultra-low-cost carrier. This phenomenon is well-established and foundational to JetBlue’s business model.

“We are not the only ones who cite the JetBlue Effect. Coined by an MIT study in 2013, the JetBlue Effect has been acknowledged by the Department of Justice (DOJ) as recently as 2021 when it said, ‘JetBlue’s reputation for lowering fares is so well known in the airline industry that it has earned a name: the ‘JetBlue Effect.’ JetBlue’s record in Boston and New York illustrates why.”

Meanwhile, JetBlue said that any Frontier deal isn’t less risky, and warned shareholders they would be “misled” if they thought otherwise.

“Both transactions would create the #5 player with very similar market share. A combined JetBlue and Spirit would have an 8% market share based on full year 2021 seats compared to 7% for a combined Frontier and Spirit. Frontier overlaps with Spirit on significantly more nonstop routes (104) than JetBlue (54)10, and JetBlue has less overlap in flights, seats, and ASMs than Frontier in the metropolitan areas served by both11,” JetBlue said in the latter.

JetBlue also pushed forward the idea they would receive greater financial rewards. In the letter it added: there was “more value and more certainty for Spirit shareholders with our all-cash offer. JetBlue offers you $30 per share in cash, representing a 60% premium to the value of the Frontier transaction as of May 13, 2022 , a 77% premium to Spirit’s latest closing price, and a 38% premium to Spirit’s unaffected share price.”

JetBlue also claimed there would be better trading value in the short term.

“… We expect the outcome of the Spirit special meeting to influence how the Spirit shares will trade in the short term. Based on the trading patterns since the Frontier transaction was announced, we expect that, if the transaction is approved, Spirit’s shares will trade at approximately $177. On the other hand, based on what we observed since our proposal became public, if the Frontier transaction is rejected, we expect Spirit shares to trade between approximately $23.1 and $25.58 , at least a 36% premium to Spirit’s latest closing share price,” it wrote in the open letter.

Shares of Spirit rose more than 19 percent to $20.28 in pre-market trading.

United Airlines should look in the “proverbial mirror” when it comes to its allegations that poor operations at Newark Liberty International Airport are the the fault of smaller competitors, JetBlue Airways said Monday.

“Instead of criticizing low-fare/low-cost carriers, United should look in the proverbial mirror first when seeking a carrier to blame for operational issues and congestion at [Newark]: United, with 72 percent of operations at [Newark], is far and away the leading carrier at [Newark] with the most responsibility for operations at the airport,” JetBlue Senior Vice President of Government Affairs Robert Land said in a letter to U.S. Department of Transportation officials.

The airline’s arguments mirror those made by Spirit Airlines, both of which United has blamed for a recent spike delays and cancellations at Newark. Spirit Vice President of Network Planning John Kirby recently told Airline Weekly that United was taking “liberties” in blaming its competitors when the mainline carrier so clearly dominates Newark.

JetBlue offers several proposals to improve operations at Newark. For one, the airline says officials should wait for the new Terminal A to open later this year, and see if the facility — plus the end of construction — improve operations. If that does not work, the Federal Aviation Administration should “convene a schedule reduction meeting” to ensure that there are no more than the recommended maximum of 79 flights per hour. Other recommendations include the approval of simultaneous dual approaches on Newark’s two main runways to increase throughput.

No matter what comes of the war of words between United, and JetBlue and Spirit one thing is clear: travelers best be prepared for flight delays and cancellations at Newark this summer.