Spirit Airlines Board Urges Shareholders to Reject JetBlue Offer

JetBlue has offered $30 a share for Spirit and said it could raise this to $33, as much as 50% above the value of

Frontier’s

cash-and-stock proposal based on recent stock prices.

JetBlue on Monday took that offer directly to Spirit shareholders following Spirit’s earlier rejection, and offered to pay the higher per-share sum if Spirit management engages in negotiations—an attempt to pressure Spirit management to reconsider JetBlue’s proposal.

Spirit Chairman Mac Gardner said Thursday that JetBlue’s offer hasn’t addressed the risk that the deal may not get past the finish line and that it doesn’t provide enough protections for Spirit shareholders.

“The proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution,” he said in a statement.

Spirit shares fell 2.8% in premarket trading, while JetBlue stock dropped 1.2%. Frontier shares, meanwhile, declined 0.6%.

JetBlue said its plan offered more certainty for Spirit shareholders and staff, with both proposals likely to face regulatory scrutiny.

“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,” said JetBlue in a statement Thursday.

Spirit shareholders are set to vote June 10 on whether to accept the Frontier deal. Spirit shares have remained below the value of both offers, signaling concern among investors that both proposals could be blocked by antitrust enforcers.

JetBlue Chief Executive

Robin Hayes

rejected Spirit’s concern that JetBlue’s alliance with

American Airlines Group Inc.

would derail any merger. The Justice Department has challenged that partnership and is suing to block it.

JetBlue has said that it doesn’t believe the partnership with American is a regulatory obstacle to a deal with Spirit, and that a combination between Spirit and Frontier would raise its own problems with antitrust authorities due to overlap in the airlines’ route networks.

Spirit agreed in February to be acquired by fellow low-cost airline Frontier in a cash-and-stock deal, currently valued at about $20 a share. Both airlines cater to budget-conscious travelers with low base fares and fees for everything else, from bottled water to carry-on bags.

JetBlue later came in with a higher offer, arguing that a combination of JetBlue and Spirit would create a more formidable competitor to the current airline market.

JetBlue has pledged to shed assets to win regulatory approval and pay a $200 million breakup fee if it is unable to complete the proposed deal due to antitrust concerns.

Write to Dean Seal at [email protected] and Doug Cameron at [email protected]