April 8, 2022 By David Koenig, The Associated Press
DALLAS (AP) — Spirit Airlines said late Thursday that it will talk to JetBlue Airways about its US$3.6 billion bid to combine the two airlines, which appeared to leapfrog an earlier offer by Frontier Airlines.
Spirit said that after speaking with financial and legal advisers, its directors believe JetBlue’s offer could “reasonably” turn out to be the better of the two deals.
JetBlue said it looked forward to completing a deal, calling itself “the best partner for Spirit.”
Frontier did not comment immediately.
In a statement, Spirit said it is still bound by terms of a US$2.9 billion deal that Spirit and Frontier announced in February, and its board has not changed a recommendation that shareholders approve the offer.
JetBlue’s bid for Spirit has received lukewarm reviews from Wall Street, with investors sending JetBlue shares down 18% since news of the offer broke on Tuesday. Some analysts have questioned whether JetBlue is underestimating the difficulty and cost of combining two very different airlines.
JetBlue operates with higher fares but offers travelers more amenities than Spirit. They have overlapping networks on the East Coast, which analysts believe could cause antitrust regulators to object to a tie-up.
Frontier and Spirit, on the other hand, are both budget airlines that charge rock-bottom fares but add fees for some things that are included in the ticket price at bigger airlines. Frontier, based in Denver, operates primarily in the West, while Spirit, based in Miramar, Florida, is stronger on the East Coast and the Caribbean.
Both JetBlue and Frontier say that acquiring Spirit would help them compete against the nation’s four biggest airlines — American, Delta, United and Southwest.
JetBlue CEO Robin Hayes said in a call with analysts on Wednesday that Spirit’s fleet of Airbus jets and its orders for 120 more planes in the next few years could help JetBlue grow faster than it could alone.
This is second time in less than six years that JetBlue has jumped into bidding to buy another airline. In 2016, Alaska Airlines emerged the winner in a battle for Virgin America. JetBlue is the nation’s sixth-biggest airline by revenue, just behind Alaska.