JetBlue Improves Offer to Acquire Spirit Airlines

JetBlue Airways aircraft are pictured at departure gates at John F. Kennedy International Airport in New York on June 15, 2013. (Fred Prouser/REUTERS)

JetBlue has raised its buying price to acquire Spirit Airlines, making several amendments to its tender offer to Spirit investors to acquire the smaller airline just days before investors vote on whether to approve a competing buyout offer from Frontier Airlines.

On Monday, JetBlue sweetened the deal in its pitch to shareholders by raising its all-cash premium offer from $30 per share to $31.50, and raised the stakes of a reverse breakup fee to $350 million in the event that antitrust regulators reject the merger.

The improved offer from JetBlue comes four days after Frontier made amendments to its own proposal, to raise the reverse breakup fee to $250 million.

These new offers are only the latest developments in a battle between JetBlue and Frontier, both of which are competing to acquire Spirit and absorb it into their companies.

Last month, Spirit Airlines rejected an acquisition offer from JetBlue, saying that the offer represented “an unacceptable level of closing risk” for Spirit shareholders. On May 16, JetBlue issued a statement urging Spirit shareholders to vote against a previously negotiated merger with Frontier, beginning JetBlue’s hostile takeover bid and occasioning a bidding war between the two airlines.

A Spirit Airlines plane takes off from the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Fla., on Feb. 7, 2022. (Joe Raedle/Getty Images)

Under normal market circumstances, Frontier would seem like the obvious contender to acquire Spirit: they operate on similar business models that would facilitate the integration of Spirit’s infrastructure in the company’s operations.

Furthermore, Frontier would likely fall under less antitrust scrutiny than the larger JetBlue if it were to absorb Spirit; JetBlue is currently embroiled in a legal battle with the Department of Justice over last year’s Northeast Alliance agreement, which regulators allege will eliminate important competition in New York and Boston.

However, the extraordinary interest shown by JetBlue in Spirit is a testament to the unusual market dynamics that have occurred as a result of supply chain disruptions and the CCP (Chinese Communist Party) virus. A consequence of these supply chain crunches has been shortages of materials necessary for the manufacture of new jets—a process that already occurs on a lag from demand, owing to the several months required to manufacture new jets.

For JetBlue, acquiring Spirit is the path of least resistance to acquiring Spirit’s existing planes—a fleet that will allow JetBlue to compete with the big four airlines; American, Delta, United, and Southwest, that together hold 66 percent of the market for air travel.

The latest offer from JetBlue arrives on the eve of a scheduled vote by Spirit shareholders on whether to approve the buyout offer from Frontier.