Decisive day for Spirit Airlines as shareholders will vote to accept Frontier or JetBlue proposal

On June 30th, the creation of the 5th largest US airline is at stake. Spirit board recommends Frontier deal despite JetBlue’s superior offer

On Wednesday, July 8th will be a decisive day for the air travel market in the United States. At stake is the creation of the 5th largest airline in the country, in an arrangement that will unite Spirit Airlines with Frontier or JetBlue.

The merger talks have been going on since February when Spirit and Frontier announced their intention to merge their businesses. The decision upset JetBlue, the low-cost carrier that would be affected by the agreement, and decided to enter the dispute.

After back-and-forth, with bids raised by both suitors, next week Spirit shareholders will vote on whether to accept JetBlue’s bid, which offers $34.15 per share, plus a $400 million reverse termination fee if the agreement is not approved by regulatory authorities.

JetBlue’s roughly $2.9 billion package is larger than Frontier’s ($2.6 billion) and even includes an additional $2.5 per share prepayment and a $0.10 monthly payment to shareholders between January 2023 and the contract closing date.

Spirit A319

Despite this, Spirit’s board of directors continues to recommend that shareholders accept Frontier’s proposal, which it considers safer to be approved by the US antitrust agency.

In the executives’ view, JetBlue’s relationship with American Airlines in the so-called “Northeast Alliance” could undermine the deal’s chances of success.

In addition, Spirit believes the stock will jump to $50 after the merger with Frontier, which would demonstrate that JetBlue’s offer is still too low.

“The latest offer from JetBlue does nothing to address our Board’s serious concerns that a combination with them would not receive regulatory approval. That unsolved issue, combined with the fact that their offer is still substantially below the potential $50 per share or more of value that we expect will result from a merger with Frontier, affirms our analysis that our merger agreement with Frontier provides more value and certainty to our stockholders,” said Ted Christie, President and CEO of Spirit.

Editor’s Note: Spirit’s board announced the postponement of the shareholder meeting on Wednesday, June 29.

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