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JetBlue raises stakes in take-over battle for Spirit Airlines

JetBlue has raised the stakes in the battle with Frontier to take over US ultra low-cost rival Spirit Airlines

The “decisively superior proposal” of $33.50 per share is 6.3% more than previously offered earlier in the month.

The new offer is worth $3.64 billion against Frontier’s initial bid worth $2.9 billion. 

The move is the latest effort by New York-based JetBlue to counter the rival Frontier bid for Spirit to create the fifth-largest airline in the US.

Florida-based Spirit said its board would work with financial and legal advisors “to evaluate JetBlue’s revised proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders”.

The carrier had rejected an initial $33 a share buyout proposal from JetBlue made in April, which was later revised to $30 and then to $31.50.

Spirit agreed to engage with JetBlue after the larger airline increased a reverse break-up fee by $150 million to $350 million, payable to Spirit shareholders, in case the deal falls through due to antitrust reasons.

However, Spirit continues to be in talks with Frontier under the terms of its existing merger agreement.

It plans to provide an update ahead of a special meeting of Spirit shareholders scheduled for June 30.

The latest round in the bidding war for Spirit came as JetBlue secured more slots at Heathrow to run transatlantic services and added a second daily service from Gatwick to New York.  

JetBlue chief executive Robin Hayes said: “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’ [US carriers] and deliver value to all of our stakeholders.

“Together, we will deliver lower fares and a better experience to more customers.”

He added: “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. 

“We are ready to move quickly to reach a merger agreement, bringing more value to shareholders, more competition to the industry, and more opportunities, including JetBlue’s incredibly strong culture and commitments to our crew members, as we welcome Spirit team members into the JetBlue family.” 

Frontier’s chairman William Franke told The Wall Street Journal earlier this month that his airline had made a fair offer and that he had no immediate plans to increase it.

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