JetBlue Ups the Ante in Efforts to Acquire Spirit Airlines

Despite Spirit's commitment to the Frontier merger, JetBlue won't stop trying

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Once again, the looming $6.6 billion merger of budget carriers Spirit and Frontier is making headlines as JetBlue continues its attempts to squash the merger and acquire Sprit instead. First announced in February, the merger would bring together two notoriously no-frills carriers that offer low base fares but charge extra for almost everything else, including carry-on bags and seat selection. Although many may appreciate their affordable price points, the two airlines are no stranger to customer frustration.

Shortly after the announcement, JetBlue attempted to shoulder its way into the merger, offering up an all-cash deal that would have bumped Spirit's value to a jaw-dropping $3.6 billion. Spirit later announced they would be rejecting JetBlue's offer, stating that the deal would not be "reasonably capable of being consummated."

But just two weeks later, JetBlue returned with a slightly lower second offer and some aggressive tactics. The airline went as far as creating a website (jetblueoffersmore.com) petitioning shareholders directly, calling the Frontier offer "inferior." It urges shareholders to vote no during the upcoming formal vote on June 10 and offers $30 cash for each Spirit share sold to Jetblue.

Spirit has not responded to this latest offer yet but in a May 2 statement Mac Gardner, chairman of the board of directors for Spirit Airlines said, "Spirit continues to believe in the strategic rationale of the proposed merger with Frontier and is confident that it represents the best opportunity to maximize long-term shareholder value." He continued, "We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, Team Members and Guests."

According to a 2021 breakdown by the U.S. Department of Transportation, Spirit boasts 13.25 complaints per every 100,000 passengers, the highest complaint ratio of any airline. Frontier clocked in at number 3 on the list, with 5.76 complaints per 100,000 passengers (JetBlue was second, with 6.85). According to the American Customer Satisfaction Index, both airlines possess the industry's worst customer satisfaction ratings.

"This transaction is centered around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public," said Spirit CEO Ted Christie in a statement.

If the shareholders approve the merger on June 10, it will be the first U.S. airline merger since 2016 when Alaska Airlines acquired Virgin America for $2.6 billion. That deal didn't shake out so well for Virgin: Alaska Airlines went on to mostly dissolve the Virgin America brand. "While the Virgin America name is beloved to many, we concluded that to be successful on the West Coast, we had to do so under one name," Alaska's senior vice president of marketing Sangita Woerner said at the time.

Could the same changes be in store for Spirit or Frontier? Details have not yet been released about the possibility of a new name, the location of the merger's new headquarters, or who will be tapped to lead management.

There's also the question of whether or not the merger will move forward. While the transaction is expected to close in the second half of the year, it must be approved by federal antitrust regulators. With the stricter crackdown on mergers under the Biden administration, that approval is not guaranteed. Most recently, the administration's Justice Department blocked an alliance between American Airlines and JetBlue, breaking up what could have been a complete merger.

If approval is granted, the combination of the two budget powerhouses will offer more than 1,000 daily flights to over 145 destinations—certainly nothing to sneeze about. Whether or not there will be changes to the quality of the airlines' services remains to be seen.

Article Sources
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  1. Market Watch. "JetBlue's Bid For Spirit Throws a Wrench Into the Planned Spirit-Frontier Merger." https://www.marketwatch.com/story/jetblues-bid-for-spirit-throws-a-wrench-into-the-planned-spirit-frontier-merger-11649200030

  2. Media release. "Spirit Airlines Board of Directors Reiterates Support for Merger with Frontier Airlines." May 2, 2022

  3. CNN Business. "Spirit and Frontier Airlines Plan to Merge." February 7, 2022.

  4. American Customer Satisfaction Index. "Benchmarks By Company." Accessed February 7, 2022.

  5. Simple Flying. "Why Did Alaska Airlines Remove the Virgin Brand So Fast?" October 7, 2020.

  6. The New York Times. "American Airlines and JetBlue Face Antitrust Suit Over Alliance." September 19, 2021.

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