Metropolitan Airport NewsMetropolitan Airport News
  • Airport News
    • Publisher’s Message
    • Fast Five
    • On Duty
    • Air Cargo
    • Airline News
    • Airport Community
    • Airport Employment News
    • Airport Safety & Security
    • Company Spotlight
    • Ground Services
    • Intermodal
    • New York Aviation History
    • Non-Rev Traveler
  • Airport & Aviation Events
  • Airport Employment
  • Latest Issue
  • Login

Subscribe for Updates

Get the latest local airport and aviation news delivered right into your inbox each week!

News Updates

American Airlines Cargo Partners with BioNatur Plastics, Reducing Long-Term Plastic Waste Equal to 6.4 Million Water Bottles in 2022

February 1, 2023
Atlas Air Takes Delivery of Boeing’s Final 747 Production Aircraft

Atlas Air Takes Delivery of Boeing’s Final 747 Production Aircraft

February 1, 2023
Hawaiian Airlines Appoints Tom Zheng as Vice President of Technical Operations Business Planning and Services

Hawaiian Airlines Appoints Tom Zheng as Vice President of Technical Operations Business Planning and Services

January 31, 2023
Facebook Twitter Instagram
Metropolitan Airport NewsMetropolitan Airport News
  • Airport News
    • Publisher’s Message
    • Fast Five
    • On Duty
    • Air Cargo
    • Airline News
    • Airport Community
    • Airport Employment News
    • Airport Safety & Security
    • Company Spotlight
    • Ground Services
    • Intermodal
    • New York Aviation History
    • Non-Rev Traveler
  • Airport & Aviation Events
  • Airport Employment
  • Latest Issue
  • Login
Metropolitan Airport NewsMetropolitan Airport News
Home»Airline News»JetBlue Submits Enhanced Superior Proposal to Acquire Spirit
Airline News

JetBlue Submits Enhanced Superior Proposal to Acquire Spirit

By adding clear divestiture commitments and a reverse break-up fee to its previous all-cash offer, JetBlue offers more value and certainty to Spirit shareholders than the Frontier transaction
Metropolitan Airport NewsBy Metropolitan Airport NewsMay 2, 2022No Comments6 Mins Read
Facebook Twitter LinkedIn Email
Spirit Airlines Adds Four Daily Newark Routes for Easy Access to the West Coast

JetBlue announced it has enhanced its proposal to the Board of Directors of Spirit to acquire all of the outstanding common stock of Spirit for $33 cash per share. The enhanced proposal offers Spirit shareholders both superior financial value and greater certainty than the Frontier transaction:

  • Divestiture commitment: If necessary, JetBlue would agree to divest assets of JetBlue and Spirit up to a material adverse effect on Spirit, with a limited carve-out for actions that would adversely impact JetBlue’s Northeast Alliance (NEA) with American Airlines.
  • Remedy package to address NEA and regulatory concerns: JetBlue would offer a remedy package that includes the divestiture of all Spirit assets in New York and Boston so that JetBlue does not increase its presence in the airports covered by the NEA. The package would also include gates and assets at other airports, including Fort Lauderdale.
  • Reverse break-up fee: JetBlue would provide for a $200 million reverse break-up fee, representing approximately $1.80 per Spirit share, that would become payable to Spirit in the unlikely event the JetBlue transaction is not consummated for antitrust reasons.
  • Superior, all-cash premium: JetBlue’s proposal continues to offer Spirit shareholders $33 in cash per common share, a 47% premium to the value of the Frontier transaction as of April 29, 2022, and a 52% premium to Spirit’s share price as of February 4, 2022 (the last trading day prior to the Spirit-Frontier announcement).

“By creating a national competitor to the Big Four airlines, this transaction would deliver meaningful benefits for customers, superior value for shareholders of both airlines, and new opportunities for our combined crewmembers,” said Robin Hayes, chief executive officer, JetBlue. “We have confidence that we can complete this transaction to bring more low fares and great service to more customers. A JetBlue-Spirit combination will deliver enhanced financial strength and accelerate revenue growth and profitability for JetBlue shareholders.”

The regulatory commitments in JetBlue’s enhanced offer represent a significant improvement compared to those offered by Frontier. The revised offer comes after Spirit limited JetBlue’s access to important due diligence data yet requested unprecedented commitments from JetBlue that far exceed those in prior airline transactions.

“Spirit shareholders would be better off with the certainty of our substantial cash premium, regulatory commitments, and reverse break-up fee protection,” Hayes said. “The Frontier transaction has a similar regulatory profile to ours but offers no divestiture commitment and no reverse break-up fee, while the uncertain value of Frontier’s stock exposes Spirit shareholders to significant risk. We hope the Spirit Board will now recognize that ours is clearly a superior proposal and engage with us more constructively than they have to date. We are making our offer public so their shareholders are aware this attractive value-creating opportunity is available to them.”

Spirit shareholders will assume a number of risks if the Frontier transaction moves forward:

  • Frontier is not required to undertake any divestitures to obtain the necessary regulatory approvals to close its transaction, despite having greater overlap with Spirit on nonstop routes than JetBlue does, among other regulatory hurdles.
  • Frontier is not required to pay a reverse break-up fee if the transaction is not consummated for antitrust reasons even though the Frontier transaction has a similar regulatory profile as the proposed transaction with JetBlue.
  • The value of Frontier’s stock, the basis for the transaction’s value to Spirit shareholders, is subject to significant risks and has already declined approximately 14% since Frontier’s offer was announced. Specifically, the value of Frontier’s stock declined from $12.39 on February 4, 2022, to $10.61 on April 29, 2022, which translated into a deterioration of the value of the Frontier transaction of $3.41 per Spirit share or approximately $370 million.
  • The financial projections underpinning the transaction with Frontier are based on unrealistically optimistic assumptions, especially with respect to costs associated with personnel attrition and wage inflation. Their model does not consider any wage increases for team members, including pilots, at a time of high attrition and an anticipated shortage of pilots.

JetBlue Effect 3x Greater than ULCCs; Similar Regulatory Profile to Frontier
A combined JetBlue-Spirit will create a more compelling national low-fare competitor to challenge the Big Four airlines that control more than 80% of the U.S. market. When JetBlue introduces its unique combination of low fares and award-winning service onto new routes, legacy carriers lower their fares and customers win with more choice. With its positive effect on competition, and backed by its regulatory commitments, JetBlue has a high degree of confidence in its ability to achieve regulatory approval of its acquisition of Spirit.

  • JetBlue’s entry into new nonstop routes triggers fare decreases from legacy airlines that are more significant than those resulting from ultra-low-cost carriers (ULCCs) – approximately 16%, or three times the result of ULCCs on legacy nonstop routes – known as the JetBlue Effect.
  • The faster expansion of JetBlue and the JetBlue Effect, coupled with a proposed remedy package and the continued expansion of other ULCCs, will address regulatory concerns that Spirit, the regulators, or the courts may have.
  • Both transactions would result in companies of similar size, creating the No. 5 U.S. airline: JetBlue/Spirit would have a 9% market share based on full year 2022 seats compared to 8% for a combined Frontier/Spirit.
  • Contrary to common misperceptions, JetBlue has significantly less overlap with Spirit in terms of flights, seats, and ASMs than Frontier in the metropolitan areas served by both. JetBlue overlaps with Spirit only on 48 nonstop routes compared to Spirit and Frontier’s overlap on 76 nonstop routes.
  • The NEA – which JetBlue strongly believes will be allowed to continue because the alliance is delivering the customer benefits promised – is not a factor in this transaction. Given the remedy package, JetBlue’s analysis finds that the presence of the NEA would have no meaningful economic effect in a JetBlue-Spirit transaction.

“Customers shouldn’t have to choose between a low fare and a great experience, and with JetBlue, it’s possible for customers to have both,” Hayes said. “Both the NEA and the proposed Spirit transaction are strategic actions that accelerate our existing growth plan and bring the JetBlue Effect to more customers in the Northeast, Florida, and around the country. By bringing together the power of the JetBlue and Spirit teams, this combination would strengthen JetBlue’s ability to grow, deliver outstanding service, and compete in a domestic market dominated by the four largest airlines. We look forward to delivering these benefits to all stakeholders once Spirit determines our proposal to be superior and we close the transaction.”

JetBlue
Share. Facebook Twitter LinkedIn Email
Metropolitan Airport News
  • Website
  • Facebook
  • Twitter
  • LinkedIn

Produced by a team of aviation professionals, and enthusiasts our mission is to inform and update the more than 68,000 employees who work on the metropolitan New York airport properties, as well as the many others that provide goods and services in the surrounding communities.

RELATED NEWS & UPDATES

Paper cups on board Alaska Airlines flights.

Alaska Airlines Eliminates Inflight Plastic Cups

January 25, 2023
Scott's Cheap Flights Announces Rebrand to Going

Scott’s Cheap Flights Announces Rebrand to Going

January 23, 2023
Hawaiian Airlines Joins Embry-Riddle’s SkillBridge Program

Hawaiian Airlines Joins Embry-Riddle’s SkillBridge Program to Train, Employ Transitioning Military Personnel

January 20, 2023
JFK Airport digital backwall Delta

Transformation Continues at Delta’s New York City Hubs

January 18, 2023
United Airlines

United Unveils Order to Purchase Up To 200 Boeing Widebodies

January 16, 2023

Condor Airlines Moves into New Home at JFK Airport

January 5, 2023
Add A Comment

Leave A Reply Cancel Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

AIRPORT & AVIATION EVENTS
JFK Rotary Club Monthly Dinner Meeting
February 08, 2023
5:30 PM to 8:30 PM
Vetro Restaurant & Lounge
Howard Beach, New York
LGA Kiwanis Club Monthly Meeting
February 09, 2023
12:00 PM (Noon) to 2:00 PM
AirCargo 2023
February 12, 2023 - February 14, 2023
Omni Nashville
Nashville, Tennessee
  • >> More Airport & Aviation Events

Subscribe for Weekly Email Updates

Get the latest local airport news, events, and jobs delivered right into your inbox each week.

Metropolitan Airport News provides timely news, information and updates for both Port Authority of New York & New Jersey (PANYNJ) employees and businesses that provide services at, and around the major New York airports (JFK, LGA, EWR).

John F. Kennedy International Airport
PO Box 300877
Jamaica, NY 11430 USA
Phone: (347) 396-0904
Email Us

Facebook Twitter YouTube LinkedIn Flickr
JANUARY 2023 ISSUE
Metropolitan Airport News - January 2023
LATEST COMMENTS
  • mark hopkins on Capitol Air
  • Airportlife2017 on The New Terminal One at JFK
  • Carol Simon Levin on Remembering Cornelia Fort, On a Date Which Will Live in Infamy
  • About Us
  • Advertising Options
  • Charitable Giving Program
  • Back Issue Archive
  • Contact Us
© 2023 Airport Media, Inc. All rights reserved.

Type above and press Enter to search. Press Esc to cancel.