In travel news for June 9th, 2022 we talk about the on-going Frontier, Spirit, JetBlue saga.
Spirit Airlines continues to be caught between two suitors in a love triangle worthy of its own daytime soap opera. Back in February Frontier Airlines entered into a proposed merger with Spirit Airlines. The new, yet to be named airline would jump to the number 5 spot for U.S. domestic miles flown, behind United, American, Delta, and SouthWest.
In April JetBlue Airways made an unsolicited all cash offer of $3.6 billion dollars, over $700 million dollars more then the offer from Fronter. Spirit Declined the offer based on concerns over legal and regulatory issues from JetBlues NorthEast Alliance with American Airlines. After their offer was declined JetBlue shifted towards a hostile takeover strategy by appealing directly to shareholders to vote down the frontier merger during a vote scheduled for June 10th.
On Tuesday, May 31, International Shareholders SErvices, a proxy firm that is usually hired to asses potential mergers and accusations, issued a report where they advised spirit shareholders to reject the Frontier offer, in favor of the financially superior JetBlue offer. To no ones surprise, the firm was hired by JetBlue.
JetBlue continues to be aggressive, recently adding a $200 million dollar termination fee to it’s offer. Not to be out down Frontier added a $250 million dollar termination fee to their current offer. The termination fee would be paid to Spirit Airlines in the event the company failed to complete the merger. The termination fee gives shareholders additional protections once a merger offer has been approved. Even though Frontier has the higher termination fee, their offer of 2.9 billion dollars is still less then the 3.6 billion dollars offered by JetBlue
The CEO of JetBlue followed this with a letter sent to Spirit Employees to show the companies commitment to them in the event a merger were to take place. In this letter JetBlue mentions that employee pay and benefits under JetBlue is superior to that of both Spirit and Frontier as well as their no furlough commitment to their employees.
Yesterday Spirit Airlines announced a delay to the shareholder meeting, moving the meeting from June 10th to June 30th. Even though Spirit Airlines is still recommending that shareholders vote for the merger with Frontier, the company wants additional time to do their due diligence on the updated offer from JetBlue.
What’s still unknown is what effect either offer will have on consumers. Both Spirit and Frontier have lead the industry in number of complaints per 100,000 passengers. However, JetBlue would have to divest of routes or agreements with other airlines to get regulatory approval from the U.S. government. We will continue to offer updates as they become available.