Spirit Airlines, Inc. announced that its Board of Directors in consultation with outside advisors, unanimously determined that the unsolicited proposal received from JetBlue Airways is not superior to the offer from Frontier Airlines.
According to a release, the proposal was rejected because the board “determined that the proposed transaction is not reasonably capable of being consummated.”
The one difference between Spirit and Frontier is that Spirit offers mostly daily service to its destinations, while many cities served by Frontier have flights a few days a week. Both airlines cater to leisure travelers.
Indigo Partners bought a controlling stake in Frontier after selling its Spirit shares. Indigo has converted Frontier into the low model used by Spirit. Both carriers charge extra for seat assignments, luggage in overhead bins, and other services.
Jet Blue operates a business model with more services built into its fares.
Frontier serves Wilmington-New Castle with flights a few times a week to Orlando. Frontier and Spirit both operate flights from Philadelphia and Baltimore Washington.
The name for the combined airlines or its headquarters city has not been announced. Frontier is based in Denver while Spirit is headquartered in Florida.
“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,” said Mac Gardner, chairman of the board for Spirit Airlines. “After a thorough review and extensive dialogue with JetBlue, the Board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders. 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.”
As previously announced on February 7, 2022, Spirit entered into a merger agreement with Frontier, under which Spirit and Frontier would combine in a stock and cash transaction. Under the terms of the merger agreement, Spirit equity holders would receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own.
The Company will work to advance toward completing the transaction with Frontier, which is expected to close in the second half of 2022. The transaction is subject to customary closing conditions, including completion of the ongoing regulatory review process.
Approval from antitrust regulators is not a sure thing, although the combined carriers would still be smaller than the “Big 4” airlines, Delta, United, American, and Southwest.