Spirit Airlines will continue discussions of a potential merger with JetBlue after departing from its merger agreement with Frontier Airlines. The shares of the three airlines changed little in after-hours trading following the announcement.
“Going forward, Spirit’s board of directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our shareholders,” Spirit CEO Ted Christie said in a statement.
Frontier President William Frank said: “While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed group, Frontier Board took a disciplined approach throughout its negotiations with Spirit. We focused on the appropriate value proposition for Spirit, giving Priority to consumers and the best interests of Frontier, our employees, and our shareholders.”
Frank added that his airline remains well-positioned to deliver significant shareholder value while serving the growing demand for affordable air travel.
Frontier reported Wednesday that operating revenue rose 43% to $909 million compared to the second quarter of 2019 before COVID.
Frontier and JetBlue have entered a months-long bidding war to buy a competing low-cost airline based in Miramar, Florida.
|ribbon||protection||else||they change||they change %|
|save||Spiritual Airlines Company||24.30||+0.92||+ 3.93%|
|blue||JetBlue Airways Corporation.||8.40||+0.29||+ 3.58%|
|ULCC||Front Holding Group||11.27||+0.68||+ 6.42%|
Spirit shareholders were trading between Frontier’s stock-and-cash offer of $22 per share, or $2.4 billion, which would give Spirit shareholders 48.5% of the combined airline and a return offer from JetBlue of $33.50 per share, or $3.6 billion. .
The bidding war for the largest US low-cost airline began in February after parent Frontier Airlines, Frontier Group Holdings, and Spirit announced a definitive merger agreement “whereby the companies will combine, creating America’s most competitive ultra-low-cost airline”.
JetBlue will not retreat, it continues its battle for Spiritual Airways
In the ad, Frontier indicated that consumers would save millions by getting more ultra-low prices to more cities.
Spirit Airlines said in April it had received an “unsolicited offer” from JetBlue to buy all outstanding shares of Spirit stock to dismantle the potential merger. At $33 a share, the offer is a 50% premium to Spirit’s closing price the day before the announcement.
Although JetBlue’s original offer was rejected, the company has continued to offer several revised offers since then.
Both companies repeatedly tried to persuade the budget carrier to reject the competing bid and make statements why their company would provide greater value to shareholders and customers.
The decision was not easy for Sprit, which has twice delayed a vote on its proposed merger with Frontier to continue merger talks between its shareholders and the two rival airlines.
“Unlike the disguised Spirit-Frontier group, the acquisition of Spirit by JetBlue, a high-fare carrier, will result in fewer choices and more expensive travel for consumers,” Frontier announced in a public note to Spirit shareholders in May.
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Meanwhile, JetBlue told Sprit shareholders in June that if they wanted “more value and more certainty, sooner,” they should vote “against the Frontier deal.”
JetBlue CEO Robin Hayes has previously argued that the “JetBlue-Spirit deal will create a truly national competition for the Big Four and deliver value to all of our stakeholders” while providing “lower pricing and a better experience for more customers.”
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The Associated Press contributed to this report.
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