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Bloomberg
JetBlue Airways Corp was close to an agreement to buy Spirit Airlines Inc, according to people familiar with the matter, swooping in hours after Spirit ended a pending merger with Frontier Group Holdings Inc on a lack of shareholder support.
An accord was expected to be announced as soon as Thursday, said the people, who asked not to be identified discussing private information. A new agreement would cap a more than three-month effort by JetBlue to disrupt the combination that Spirit agreed to with Frontier in February. It kept Spirit shareholders out of the arms of its competitor by offering more cash, upfront dividend payments and a breakup fee if regulators intervene.
A Spirit acquisition would be JetBlue’s best shot to broaden its network quickly and provide an infusion of pilots and aircraft orders, both of which are expected to be in short supply for several years. JetBlue has said the combination would give it the scope to be more competitive on price against the nation’s largest airlines. A merger would cement it as the fifth-largest in the US based on domestic passenger traffic.
JetBlue’s shares rose 2.5% in premarket trading on Thursday, while Spirit’s shares were 5.8% higher.
Spirit and Frontier mutually agreed to terminate their $2.6 billion stock-and-cash agreement after the plan failed to garner shareholder support even after four delays in a scheduled vote on the deal. The move ended the most contentious takeover battle in the industry since 2016, when JetBlue lost out to Alaska Air Group Inc in a fight to acquire Virgin America.
A Spirit-Frontier combination would have created the largest US deep-discount airline, which charges reduced fares but charges for anything extra like printed boarding passes or onboard snacks and refreshments.
If it closes a deal for Spirit, JetBlue will face the potential hurdle of a stringent review by antitrust enforcers in the Biden administration, which has pledged to more thoroughly scrutinise such combinations to determine if they would concentrate market share too much and benefit or hurt consumers.