June 27, 2022

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JetBlue Makes Offer for Spirit Airlines

2 min read

JetBlue Airways has offered to buy Spirit Airlines for $3.6 billion, throwing a wrench into Spirit’s plan to merge with Frontier Airlines and create a behemoth budget carrier.

Spirit and Frontier, both low-cost airlines, agreed in February to merge in a deal the companies said would save consumers about $1 billion a year. JetBlue offered $33 a share in cash, Spirit said on Tuesday, far more than Frontier’s cash-and-stock offer.

Frontier’s shares have fallen since it and Spirit announced their deal, reducing the value of the offer, which has an implied value of about $25 a share at current prices. Spirit said its board plans to review JetBlue’s bid and “respond in due course.” JetBlue’s chief executive, Robin Hayes, said the deal would be “a game changer,” allowing the airline to offer more quality, affordable flights.

“Customers shouldn’t have to choose between a low fare and a great experience, and JetBlue has shown it’s possible to have both,” he said in a statement.

After the news of the bid broke on Tuesday, Frontier countered that JetBlue’s prospective purchase of Spirit would limit options and harm consumers.

Spirit’s shares jumped 22 percent on Tuesday, and Frontier’s rose 4 percent. JetBlue’s stock price fell 7 percent.

Either deal would be sure to face antitrust scrutiny from the Biden administration, which has taken a tough stance on mergers and partnerships. Last year, the Justice Department sued to prevent JetBlue from forming a domestic alliance with American Airlines, arguing that the agreement would drive up prices and reduce competition. The airlines rejected the premise of the lawsuit, which is ongoing, contending that the partnership would increase competition against Delta Air Lines and United Airlines and in New York airports.

And last month, several progressive lawmakers, including Senators Elizabeth Warren, Democrat of Massachusetts, and Bernie Sanders, Independent of Vermont, expressed misgivings about the…

Lauren Hirsch, Anupreeta Das and Niraj Chokshi

2022-04-05 18:24:06

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