The bidding war between JetBlue and Frontier to acquire Broward Co., Florida-based Spirit Airlines now involves the future of Fort Lauderdale-Hollywood International Airport.
JetBlue Airways, determined to wrest Spirit away from rival bidder Frontier Airlines, has added millions more to its offer to Spirit shareholders.
But JetBlue, which is one of the biggest operators along with Spirit at Fort Lauderdale-Hollywood, says it would sell any assets Spirit holds in New York and Boston as it seeks to ease antitrust concerns by federal regulators — their Northeast Alliance with American Airlines, in which the two carriers market and sell each other’s tickets in the region, has raised concerns among those regulators.
The move, however, would result in JetBlue not expanding its presence at the Broward County airport. Previously, expansion-minded JetBlue has said it wants it take over Spirit for its planes, route system and work force. The takeover would make JetBlue the nation’s fifth-largest air carrier.
In a late Monday announcement, JetBlue served up the following to Spirit’s board of directors and shareholders:
Its per share cash offer would bump from $31.50 per share to $33.50, or $3.64 billion.
Robin Hayes, JetBlue’s chief executive officer, said he is now more confident than ever that his airline can complete a takeover of Spirit after holding more discussions with what has been a reluctant Spirit management. Spirit had been leaning toward Frontier’s $2.9 billion bid since it materialized in early February.
“The dialogue and information provided strengthened our conviction,” Hayes wrote in a letter to Spirit’s board. Over the last three and a half months, Frontier’s stock and cash offer has diminished in value as its own stock price has declined.
Frontier has shown no inclination to increase its offer.
All along, Spirit has insisted that a Frontier deal was easier to consummate because regulators would view it as being more favorable for consumers. But JetBlue’s persistence and continued willingness to throw more cash at a deal forced Spirit to delay a shareholder vote on the Frontier offer set for earlier this month while it considers the New York-based airline’s sweetened offers.
JetBlue’s latest offer would still contain a previous commitment of a $350 million reverse break-up fee, with an accelerated prepayment of $1.50 a share, if it fell apart over regulatory concerns. The JetBlue breakup fee exceeds the fee offered by Frontier by $100 million.
Addition by subtraction?
And as a salve to reluctant antitrust regulators at the U.S. Justice Department, JetBlue served up a “remedy package” that would see the airline divest itself of all Spirit assets in New York and Boston.
That gesture is designed to becalm the Biden administration over JetBlue’s Northeast Alliance with American Airlines. Both JetBlue and American are defendants in a 2021 lawsuit brought by the Justice Department, which asserts that the arrangement is not in the interest of consumers.
But a line contained in JetBlue’s discussion about divesting assets could well raise concerns in the Broward County economic development community. which counts aviation as a target industry for growth, not contraction.
After offloading Spirit’s New York and Boston assets, the airline said, “JetBlue will not increase its presence in the airports covered by the Northeast Alliance, as well as gates and related assets at Fort Lauderdale.”
The statement offered no details or elaboration.
Another review for Spirit
As it has in the past in response to previous JetBlue efforts to raise the stakes in what is now a highly public takeover battle, Spirit said its board would evaluate the latest offer " in accordance with the terms of the company’s merger agreement with Frontier Group Holdings, Inc.”
It added that it would update Spirit stockholders before a meeting scheduled for next Thursday, June 30. The airline added that its stockholders “do not need to take any action at this time.”
