Spirit and Frontier Airlines have scrapped their proposed merger agreement, leaving room for Spirit’s other admirer, JetBlue, to step in and strike a deal, first reported by CNBC. According to The Washington Post, shareholders were expected to reject the deal in a vote today, possibly because of JetBlue’s higher bid.
Frontier and Spirit first announced the proposed merger in February, a move that would have combined the two low-cost airlines into the fifth-largest in the US. But not everything went as planned — JetBlue countered Frontier’s original $2.9 billion offer with an attractive $3.6 billion offer that Spirit later rejected. In May, JetBlue launched a hostile takeover of Spirit Airlines, repeatedly attempting to sweeten the deal by increasing its bid.
Spirit executives aren’t convinced regulators would allow a merger with JetBlue
“While we are disappointed to have had to complete our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past few months,” said Ted Christie, Spirit Airlines President and CEO, in a statement. “Going forward, Spirit’s Board of Directors will continue our ongoing discussions with JetBlue as we pursue what is best for Spirit and our shareholders.”
It’s not clear what’s next, as Spirit’s shareholders have yet to approve the deal with JetBlue, and even then Spirit executives aren’t convinced regulators would allow it. Spirit has raised concerns about JetBlue’s involvement in the North American Alliance (NEA), a partnership that combines JetBlue and American Airlines services in New York City and Boston.
The NEA aims to make it easier for passengers to board connecting flights from both services and introduce more routes to both cities, but the Department of Justice (DOJ) believes this could hurt the airline industry. Last September, the DOJ filed an antitrust complaint against the NEA, arguing it weakens competition and harms passengers by consolidating the airline industry.