Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Spirit ends sale to Frontier as JetBlue talks continue

Stock Markets Jul 27, 2022 06:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A Spirit Airlines Airbuys A320-200 airplane sits at a gate at the O'Hare Airport in Chicago, Illinois, U.S. October 2, 2014.REUTERS/Jim Young/File Photo 2/2
 
JBLU
+0.15%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SAVE
+3.51%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AAL
-1.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Anirban Sen and Greg Roumeliotis

(Reuters) -Spirit Airlines Inc canceled its $2.7 billion sale to Frontier Group Holdings Inc on Wednesday after Spirit shareholders balked at supporting it, leaving JetBlue Airways (NASDAQ:JBLU) Corp with an opening to clinch a deal.

The development, first reported by Reuters on Wednesday, came after Spirit pushed back a shareholder vote on the Frontier deal four times, hoping it could muster enough support. Spirit had earlier argued that antitrust regulators were unlikely to clear JetBlue's $3.7 billion bid.

The outcome was a setback for Frontier and its chairman Bill Franke, who was instrumental in kicking off talks between the sides last year. Franke's airline-focused buyout firm, Indigo Partners, is a major shareholder in Frontier.

"While we are disappointed that Spirit Airlines (NYSE:SAVE) shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier board took a disciplined approach," Franke said in a statement.

A Frontier-Spirit combination would have reshaped the domestic travel landscape and marked the most consequential U.S. airline industry merger since Alaska Air (NYSE:ALK) Group bought Virgin America Inc for $2.6 billion in 2016.

JetBlue sees Spirit as an opportunity to expand its domestic footprint at a time when the U.S. airline industry is dogged by labor and aircraft shortages.

A sale of Spirit to Frontier or JetBlue would create the fifth-largest U.S. airline. Negotiations between JetBlue and Spirit are progressing favorably and a deal is possible in the next few weeks, according to people familiar with the matter.

"We are pleased that the merger agreement with Frontier has been terminated and we are engaged in ongoing discussions with Spirit toward a consensual agreement as soon as possible," JetBlue said in a statement.

But Spirit also could choose to remain independent.

ANTITRUST RISK

Spirit has expressed concern about JetBlue's Northeast Alliance (NEA) partnership with American Airlines (NASDAQ:AAL). The U.S. Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the U.S. Northeast.

JetBlue so far has refused to pull out of the alliance and instead offered other sweeteners like a higher breakup fee and route divestments.

Frontier shares rose 6.4% to close at $11.27 as investors expressed relief that the company exited what had become a bidding war for Spirit. Spirit shares rose 4% to $24.30, while JetBlue shares rose 3.6% to $8.35.

With the end of the proposed Spirit-Frontier tie-up, Spirit will pay Frontier $25 million for merger-related costs that it incurred. As per the terms of the deal, Spirit would owe Frontier an additional $69 million if it ends up striking a merger deal with JetBlue or any other competitor within the next 12 months.

“Now that Spirit Airlines has terminated the Frontier merger agreement, we hope that Frontier management will put aside its merger distraction and invest the same amount of resources and focus to improving conditions at their own airline," said the Frontier pilots' union, which is a subset of the Air Line Pilots Association (ALPA).

Spirit ends sale to Frontier as JetBlue talks continue
 

Related Articles

Britain's tax backdown bounces stocks and sterling
Britain's tax backdown bounces stocks and sterling By Reuters - Oct 03, 2022 2

By Tom Westbrook SYDNEY (Reuters) - Asian stocks bounced on Tuesday after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment and...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email