The Spirit Battle: Frontier Pounces on JetBlue’s Antitrust Arguments

Griz13, CC BY-SA 4.0 , via Wikimedia Commons

LONDON – On June 28, Frontier Airlines, the other primary U.S. carrier that is looking to join up with Spirit, has pounced back on JetBlue’s antitrust statements.

Providing clarity…

You may have seen that over the past few months, both Frontier and JetBlue have been competing against each other in a battle to acquire ULCC (ultra-low-cost carrier), Spirit Airlines in a move that will surely shake up the U.S. aviation sector.

The battle became so heated that it was a near-enough weekly occurrence where either of the respective parties was making heavy amendments to their agreements with the hopes of winning Spirit’s Stakeholders’ vote.

Ultimately, the eventual combination, which of course for both parties is still subject to regulatory approval, will be a key player in competing against the U.S. ‘Big Four’ carriers; American Airlines, United Airlines, Delta Air Lines, and Southwest Airlines.

It all started back in February 2022, when both Spirit and Frontier announced their merger worth a whopping $6.6 billion in both cash and stocks.

Besides targeting the ‘Big Four’ U.S. airlines, the merger also aims to expand services to small and mid-sized cities across the U.S. that have been, up to this point, heavily underserved.

Then come along a couple of months later in early April 2022, when JetBlue decided to join the agreement with an unsolicited offer to Spirit with an all-cash transaction of $33.00 per share, which would value Spirit at $3.6 billion.

Obviously, this was much to Frontier’s dislike and over the past three months, both carriers have been battling it out in a bid to win over Spirit’s Stakeholders’ votes.

However, despite a fierce battle, Spirit’s Chief Executive Officer and President, Ted Christie, and their Board of Directors, have consistently advised that they believe the merger with Frontier is much more favorable and despite the better cash offer from JetBlue, they believe that by 2025, the merged ULCC with Frontier would achieve $50 per share, which is considerably greater than JetBlue’s fixed all-cash offer.

During the battle, JetBlue has consistently insisted that with its latest amendments to the proposed acquisition, antitrust and regulatory approval will go smoothly, but in the latest release from Frontier, they are very much arguing these statements along with Spirit’s leadership teams also sat in the same boat.

Frontier has said that over the last few weeks, JetBlue has proclaimed that Spirit’s leadership teams are hiding behind “false” and “misleading” antitrust concerns, however, Frontier has said that JetBlue is not speaking the truth in these instances.

It has also been mentioned that JetBlue has admitted that it will permanently remove capacity from the market by removing seats from Spirit’s aircraft, which is classed as an “output restriction” under antitrust terms.

This would ultimately hike up costs for both the businesses and customers, and as such JetBlue’s Chief Executive Officer, Robin Hayes, mentioned a few days ago, “The average price of airfares will go up because there are fewer seats.”

JetBlue had also admitted in its 2021 10-K that the Frontier and Spirit merger is a threat to JetBlue’s “competitiveness that could cause fares of our competitors to be reduced”. Frontier continues by stating that not only are the above claims from JetBlue misleading but also comments on JetBlue’s Northeast Alliance with one of the ‘Big Four’ carriers, American Airlines.

The U.S. DOJ (Department Of Justice) has a pending lawsuit against JetBlue which aims to ultimately block its Northeast Alliance, which is likely to take years before a full conclusion is made, meaning that the merger with Spirit, if it was to go ahead, would be put on hold until the outcome of that lawsuit has been decided from the U.S. DOJ.

Despite all of this, JetBlue has still been pushing for Spirit to merge with them rather than Frontier but is pushing aside the bigger picture of the antitrust issues that may surround it.

On June 27, JetBlue said in their latest amendment to their proposal with Spirit that “outside experts agree that, within the current administration, our transaction has a similar chance as Frontier in gaining approval.”

However, Frontier is claiming that the “outside experts” in this case, are JetBlue’s own hired antitrust lawyer.


Overall, it will be very interesting to see the outcome of the vote on June 30, but it is looking more likely that the Frontier merger will be the choice for the majority of Spirit’s Stakeholders over a JetBlue merger given the circumstances, however, the decision is for them to make regardless of either of the companies arguments.

Then following the outcome, it will more than likely be many months of processes to obtain regulatory and antitrust approvals before the merger will entirely go ahead and there is a chance that this may not even happen for either of the two carriers, meaning the reverse termination fee will then come into effect for Spirit.

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