Spirit and Frontier Airlines have rejected their proposed merger deal, leaving room for Spirit’s other suitor, JetBlue, to swoop in and strike a deal, as CNBC first reported. Shareholders were expected to reject the deal during a vote today, possibly because of JetBlue’s higher offer, according to The Washington Post.
Frontier and Spirit first announced the proposed merger in February, a move that would have combined the two budget airlines to create the fifth largest in the US. But not everything went as planned: JetBlue countered Frontier’s initial $2.9 billion offer with an attractive $3.6 billion cash offer that Spirit later rejected. In May, JetBlue launched a hostile takeover of Spirit Airlines and continued to try to sweeten the deal by increasing its bid.
Spirit executives are not convinced that regulators will allow a merger with JetBlue
“While we are disappointed that we had to end our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past several months,” said Ted Christie, president and CEO of Spirit Airlines, in a statement. “Going forward, Spirit’s Board of Directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our shareholders.”
It’s unclear where things will go from here, as Spirit shareholders have yet to approve the deal with JetBlue, and even Spirit executives aren’t convinced regulators will allow it. Spirit has raised concerns about JetBlue’s involvement with the North American Alliance (NEA), a partnership that combines JetBlue and American Airlines services to New York City and Boston.
The NEA is supposed to make it easier for passengers to board connecting flights from one of the two services, as well as introduce more routes to both cities, but the Department of Justice (DOJ) believes it could hurt the airline industry. Last September, the DOJ filed an antitrust complaint against the NEA last September, arguing that it lessens competition and harms passengers by consolidating the airline industry.