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Spirit Airlines urges shareholders to reject JetBlue’s takeover bid

The discount airline’s board said it viewed JetBlue’s overture as a bid to avert a threatening Spirit-Frontier merger

Jets for Spirit Airlines sit on Orlando International Airport's tarmac. (Chris O'meara/AP)

The board of Spirit Airlines urged the company’s shareholders to reject a takeover bid mounted by JetBlue Airways, standing by its assessment that it presents a worse deal than Spirit’s proposed merger with Frontier Airlines.

“The Spirit Board has unanimously concluded that the Offer is not in the best interests of Spirit and its stockholders,” the company said in a 164-page disclosure to investors filed Thursday.

At the heart of the board’s objection is a concern about the federal antitrust scrutiny any merger between the two airlines would face, not least because JetBlue already is facing legal action over an alliance with American Airlines. JetBlue has said it doesn’t expect significant problems, but Spirit’s board has been unmoved, declining an earlier merger proposal on the same grounds at the beginning of the month.

In the new filing, the Spirit board said it had also concluded that JetBlue is motivated by the threat the proposed Spirit-Frontier merger would pose to its competitive position.

“The Spirit Board believes the Offer is a cynical attempt by JetBlue to disrupt a combination between Spirit and Frontier, which Spirit believes will create a stronger competitor against JetBlue and other airlines,” the board wrote in its filing.

The U.S. airline industry is dominated by four major carriers — American, Delta Air Lines, United Airlines and Southwest Airlines — and were Spirit and Frontier to join forces, they could sweep into the fifth-place spot that JetBlue occupies. If either proposed merger goes through, it would be the first consolidation in the airline industry since 2016 and could shake up the competitive landscape as carriers continue their recovery from the pandemic.

In a statement Thursday, JetBlue said its offer represented a better value and that Spirit was underplaying the risk that the Frontier deal could face serious scrutiny from regulators.

“It’s no surprise that Spirit shareholders are getting more of the same from the Spirit Board,” the company said. “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.”

Barry Biffle, Frontier’s chief executive, said he was pleased by Spirit’s continued commitment to merging with his airline.

“We are working with Spirit to complete our merger and create a true nationwide ultra-low fare airline to compete against the dominant ‘Big Four’ airlines and other high-cost airlines, including JetBlue,” Biffle said in a statement. “Together, we will super-charge the ultra-low-cost carrier model and create an even better option for consumers.”

The leaders of Spirit and Frontier began discussing a merger in June, according to the disclosure, and signed a deal in February. The drama soon began. Spirit says JetBlue chief executive Robin Hayes contacted the company on March 29 to say his airline was interested in acquiring Spirit in a $3.6 billion deal.

Spirit’s board took a look at the offer but rejected it. So on Monday, JetBlue took a new pitch directly to Spirit’s shareholders.

JetBlue launches another bid for Spirit Airlines

Hayes made his case in a public letter, saying the airline is offering a better deal that can win the approval of regulators. He said JetBlue expects a merger would receive approval from regulators in a time frame similar to that of a Spirit-Frontier merger.

“JetBlue offers more value — a significant premium in cash — more certainty, and more benefits for all stakeholders,” Hayes wrote. “Frontier offers less value, more risk, no divestiture commitments, and no reverse break up fee, despite more overlap on nonstop routes and their own regulatory challenges.”

This week, major labor unions weighed in on the merger talks.

The Association of Flight Attendants, which represents employees at Spirit and Frontier, said it had accepted a package of protections with Frontier’s holding company should the deal go through and would support the merger.

“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, assists with the AFA-CWA seniority integration that protects the bidding seniority each Flight Attendant has accrued prior to the merger, and paves the way for efficient contract bargaining that allows Flight Attendants to experience the benefits of the merger as soon as possible,” Sara Nelson, the union’s president, said in a statement.

The Transport Workers Union, which has members at Frontier and JetBlue, said it was opposed to JetBlue’s efforts to acquire Spirit, saying it could lead to job losses and hurt airline competition.

“The TWU fully opposes JetBlue’s proposed hostile takeover,” John Samuelsen, the union’s president, said in a statement. “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.”

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