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Spirit terminates merger deal with Frontier, reconsiders JetBlue deal

Author : Pankaj Singh | Published Date : 2022-07-29 

Spirit terminates merger deal with Frontier, reconsiders JetBlue deal

Spirit Airlines Inc has reportedly ended its merger deal with Frontier Airlines. This development comes months after a purchase bid by JetBlue Airways marred the strategic tie-up.

The budget airline has stated that it would resume its current talks with JetBlue as it pursues the best business pathway for the company and its shareholders.

A takeover by JetBlue would create the fifth-largest airline in the country. Notably, a combined Frontier and Spirit would have also ranked fifth.

Stakeholders were set to vote on the proposed combination of Spirit and Frontier, which the New York-based carrier was urging to turn down for weeks.

JetBlue has expressed delight at the termination of the Frontier deal and is engaging with Spirit to soon establish a consensual agreement.

The termination of the Frontier-Spirit agreement, however, is a setback to the discount carriers that intended to team to form a giant budget carrier.

Spirit deferred that stakeholder vote on the merger four times as it struggled to gather sufficient stakeholder support.

The termination of this agreement facilitates an acquisition deal with JetBlue, which seeks to purchase the airline outright for close to USD 3.7 billion and recondition its planes as per JetBlue style, which included legroom and seatback screens. But there is a possibility that the takeover bid could fall apart.

William Franke, Chair of Frontier Airlines’ board and Indigo Partners’ Managing Partner has expressed dismay over the failure of Spirit’s stakeholders in recognizing the consumer potential and value inherited in its combination.

Spirit Airlines’ board has continuously rejected JetBlue’s increasingly softened offers, countering that the regulators would not have approved the takeover.

Even if Spirit and JetBlue reach a deal, they would face a significant barrier in receiving approval from the Justice Department as the Biden government has pledged to crack down on consolidation.

Source credit:

https://www.cnbc.com/2022/07/27/spirit-airlines-frontier-terminate-deal-that-was-marred-by-jetblues-rival-bid.html

About Author

Pankaj Singh . .

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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