JetBlue Airways Appeals Directly to Spirit Airlines Shareholders

The Spirit Airlines board is urging the company’s shareholders to reject a takeover bid by JetBlue Airways, saying that it presents a worse deal that Spirit’s proposed merger with Frontier Airlines.

In a 164-page disclosure to investors filed on March 19, the company said, “The Spirit Board has unanimously concluded that the offer is not in the best interests of Spirit and its stockholders.”

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

The board ostensibly is concerned about facing the federal antitrust scrutiny that a merger between the two airlines would engender, especially because JetBlue is already facing legal action over its alliance with American Airlines. JetBlue, for its part, has said it does not anticipate major problems with the merger. However, the Spirit board is not convinced, and it declined a merger proposal for the same reason earlier in the month.

In the new filing, the Spirit board said it believes JetBlue is only interested in merging because it feels threatened by the competition a Spirit-Frontier merger would create.

“The Spirit Board believes the offer is a cynical attempt by JetBlue to disrupt a combination between Spirit and Frontier, which Spirit believes will create a stronger competitor against JetBlue and other airlines,” the board wrote.

Currently, four carriers dominate the U.S. airline industry: American, Delta Air Lines, United Airlines, and Southwest Airlines. If Spirit and Frontier merged, they would immediately take the fifth-place spot that JetBlue now holds.

In its own statement on March 19, JetBlue claimed its offer is a better value for Spirit shareholders, and that Spirit is underplaying the fact that the Frontier deal could also face intense scrutiny from regulators – JetBlue attributes this to alleged conflicts of interest held by Spirit board members.

“It’s no surprise that Spirit shareholders are getting more of the same from the Spirit board,” JetBlue said. “The Spirit board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.”

On the other hand, Barry Biffle, Frontier’s President and CEO, said he was pleased that Spirit remains committed to merging with his airline.

“We are working with Spirit to complete our merger and create a true nationwide ultra-low fare airline to compete against the dominant ‘Big Four’ airlines and other high-cost airlines, including JetBlue,” Biffle said in a statement. “Together, we will super-charge the ultra-low-cost carrier model and create an even better option for consumers.”