LONDON – Spirit Airlines has provided an update on the merger with Frontier Airlines, by saying they are in discussions with JetBlue as well now.

This has confirmed rumors that Spirit is considering JetBlue’s offer, especially with the airline delaying its stockholder meeting to June 30.

Ted Christie’s Words…

Spirit CEO & President Ted Christie has gone on the record via press release about this:

“Consistent with its fiduciary duties, Spirit’s Board of Directors is engaging in discussions with JetBlue with respect to the proposal received on June 6, 2022, and is also continuing to work with Frontier under the terms of the existing merger agreement between Spirit and Frontier.”

“As part of this process, Frontier and JetBlue are being given access to the same due diligence information, on the same terms.”

“The Board expects to bring the process to a conclusion and provide an update to stockholders ahead of the Special Meeting of Spirit Stockholders scheduled for Thursday, June 30, 2022.”

Where Has This Come From?

Last week, JetBlue submitted yet another improved proposal to Spirit Airlines as the eagerness continues to acquire the ultra-low-cost carrier.

Under the new proposal, the following three elements stick out:

• Enhanced reverse break-up fee: JetBlue would provide a $350 million ($3.20 per Spirit share¹) reverse break-up fee, payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons. This represents an increase of $150 million, or $1.37 per Spirit share, to the reverse break-up fee JetBlue has previously offered to pay and is $100 million greater than the amount being offered by Frontier.
• Accelerated prepayment of $1.50 per share: JetBlue would prepay $1.50 per share in cash (approximately $164 million) of the reverse break-up fee, structured as a cash dividend to Spirit stockholders promptly following the Spirit stockholder vote approving the combination between Spirit and JetBlue.²
• Superior, all-cash premium: JetBlue’s proposal offers Spirit stockholders aggregate consideration of $31.50 per share in cash, comprised of $30 per share in cash at the closing of the transaction and the prepayment of $1.50 per share of the reverse break-up fee.

Robin Hayes, the CEO of JetBlue continued on the line of the combination creating a true national competitor to the dominant legacy carriers:

“Combining JetBlue and Spirit would create a true national competitor to the dominant legacy carriers, delivering low fares and a great experience for more customers, more opportunities and good-paying jobs for crew members, and more value for stockholders.”

“The key features of our Improved Proposal – the up-front cash payment and increased reverse break-up fee – reflect the seriousness of our commitment and underscore our confidence in completing this transaction.”

“Additionally, given the similar regulatory risks of the two transactions and the increased reverse break-up fee we are prepared to provide, we believe our Improved Proposal remains a Superior Proposal by any measure.”

Overall…

This is a complete reversal of perspective from Spirit Airlines as they had originally urged stockholders to continue onwards with the Frontier deal.

Now that the revised deal has been offered, Spirit stockholders will no doubt have a lot to think of ahead of the meeting on June 30.

Either way, it’s going to be interesting to see how this pans out.