FORT LAUDERDALE (CBSMiami/AP) – Spirit Airlines has rejected JetBlue’s $3.6 billion offer, saying it still supports Frontier Airlines’ $2.9 billion takeover bid, which is more likely to win regulatory approval.
Spirit said antitrust regulators are unlikely to approve JetBlue’s offer because of JetBlue’s alliance with American Airlines in the Northeast, a deal that the Justice Department is suing to block.
READ MORE: Elderly Florida Woman’s Body Found In Freezer
“We struggle to understand how JetBlue can believe” that the Justice Department or a court would let JetBlue strike a deal with American, then buy Spirit, eliminating the nation’s largest low-cost airline, the Spirit board said in a letter to JetBlue directors.
JetBlue rejected Spirit’s view, especially after promising last week to make concessions designed to assure regulatory approval of its offer. JetBlue’s CEO seemed to raise the possibility of a hostile takeover bid.
Shares of Miramar, Florida-based Spirit sank more than 9%. New York-based JetBlue’s stock gained nearly 3%, while shares of Denver-based Frontier fell 4%.
The development was a reversal from last month, when Spirit said that after speaking with financial and legal advisers, its directors believed JetBlue’s offer could “reasonably” turn out to be the better of the two deals.
Spirit said its board unanimously continues to back the bid made by Frontier in February and views it as the best way to maximize value. The airline anticipates a deal with Frontier closing in the second half of the year.
The JetBlue-American cooperative venture in Boston and New York, called the Northeast Alliance or NEA, was opposed by Spirit and other competitors long before Frontier’s February bid to buy Spirit.
JetBlue tried to satisfy regulatory concerns by offering to divest Spirit’s airport gates and takeoff and landing slots in New York and Boston and maybe in Fort Lauderdale, Florida. However, Spirit’s board said Monday that the revised offer is unlikely to appease regulators because the revised offer still “makes clear that JetBlue is unwilling to terminate” the partnership with American.
READ MORE: Brian Flores’ Lawyer Tells Judge It’s ‘Unconscionable’ For NFL Commissioner Roger Goodell To Arbitrate Suit
A Spirit-Frontier merger would combine the nation’s two largest budget airlines and create the No. 5 U.S. carrier. While Spirit and Frontier are similar “ultra low-cost” carriers, JetBlue operates on a business model that is more like the big four — American, Delta, United and Southwest. JetBlue would absorb Spirit and eliminate a budget airline that regulators believe helps keep ticket prices lower.
JetBlue on Monday repeated the argument that its offer is better for Spirit shareholders: It would pay them $33 per share in cash compared with Frontier’s cash-and-stock offer worth $22.42 per share, and JetBlue’s offer was sweetened to include a $200 million break-up fee if the deal falters.
“We hope the Spirit board will now recognize that ours is clearly a superior proposal and engage with us more constructively than they have to date,” said JetBlue CEO Robin Hayes.
Hayes was far more blunt, even threatening, throughout a five-page letter last week to Spirit Chairman Mac Gardner and CEO Ted Christie. Hayes wrote that his airline’s divestment promises should comfort Spirit leadership about JetBlue’s ability to win antitrust approval.
“While we would unquestionably prefer to negotiate a transaction with you, if you continue to refuse to constructively engage with us so that we can deliver this value to your stockholders, we are actively considering all other options available to us,” Hayes wrote.
Frontier CEO Barry Biffle said last week that regulatory review of a Frontier-Spirit combination “is already well underway and many months ahead of any alternative.”
When an analyst pressed Biffle on why Frontier hasn’t campaigned more aggressively and publicly for its bid, he said, “We have been pretty clear” about how Frontier views the benefits of its offer. “I don’t think we have to keep repeating it.”
MORE NEWS: Grieving Father Of 2-Year-Old Girl Killed In NW Miami-Dade Hit-&-Run Crash Releases Video In Hopes Of Finding Driver Video
(© Copyright 2022 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)