JetBlue vs. Frontier: who will win the battle for Spirit Airlines and why does it matter?

JetBlue vs. Frontier: who will win the battle for Spirit Airlines and why does it matter?

New York-based JetBlue on Monday made its fourth bid since March to acquire Spirit Airlines — and this time, Spirit was quite attentive to the JetBlue initiative. 

In February, Spirit almost signed a merger agreement with Frontier Airlines — an agreement favored by the management and board of directors of Spirit, — but the contract amount shown in it is significantly less than in each of the four JetBlue offers.

In its latest run, JetBlue offered Spirit at $33.50 a share, or about $3.7 billion in total — about 68 percent more than the cost announced when Spirit merged with Frontier. Until now, the people of “Spirit” argued that JetBlue's proposal was no better. True, according to experts, the reason lies in another — no one believed it would get regulatory approval.

Recall that earlier this month, Spirit shareholders were supposed to vote on the Frontier merger deal, but the vote was postponed to June 30

Unexpectedly last week, Spirit announced that treats JetBlue's proposal as closely as it does a competitor from Frontier.

At any rate, Spirit said in a statement that its board is “considering a new JetBlue proposal.”

In addition to increasing the amount of the deal, JetBlue's new document includes a commitment to sell more JetBlue and Spirit assets to meet regulatory requirements. These assets may include intangibles such as approved slots at congested northeast airports. JetBlue previously pledged to sell Spirit's assets in New York and Boston — JetBlue's two largest markets.

In fact, it remains unclear whether regulators will agree to this deal. JetBlue aims to maintain its valuable Northeast alliance with American Airlines — the airline's most important strategic partnership, — but many analysts believe that the antitrust authorities of the Department of Justice will not allow JetBlue to acquire Spirit by continuing its cooperation with American. 

If the deal is still blocked on antitrust grounds, JetBlue will pay Spirit a contract termination fee of 350 million dollars. 

The situation has not been resolved for several months, and one can only guess what will happen next.

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