JetBlue Airways Corp. is vying to buy Spirit Airlines Inc. for roughly $3.6 billion, challenging rival Frontier Airlines in its efforts to buy the ultralow-cost airline.
JetBlue offered to buy Spirit in an all-cash transaction for $33 a share, Spirit said Tuesday, describing the offer as an unsolicited bid.
Frontier Group Holdings Inc., another ultralow-cost carrier, had in February announced a deal to buy Spirit for $2.9 billion in cash and stock—a deal that would transform the two discounters into the fifth-largest U.S. airline.
Spirit said its board would evaluate JetBlue’s proposal and determine the best course of action.
JetBlue said in a written statement that it believes its proposal is the better opportunity for Spirit investors, and that its offer represented a 37% premium to the value implied by the Frontier proposal. But under Frontier’s proposal, Spirit’s existing shareholders would retain a 48.5% stake in the combined company.
Spirit’s shares rose 22% Tuesday. The New York Times earlier reported JetBlue’s bid.
If JetBlue wins out, it would thwart the ambitions of Frontier Chairman William Franke, who helped transform Spirit and Frontier into ultradiscounters and has long sought to bring the two airlines together.
JetBlue has looked to strike deals before as it sought a bigger national footprint to try to compete against the big four airlines that dominate the industry. JetBlue tried to buy Virgin America but lost to Alaska Air Group Inc. in 2016.
“When you see a proposal come through like the Frontier-Spirit merger, you recognize that if you want to do something, you have a finite period of time to act,” JetBlue Chief Executive Robin Hayes said in an interview Tuesday. “But the strategic thinking and the strategic value is obviously something we’ve been thinking about for a number of years.”
If it acquires Spirit, JetBlue would be able to grow more quickly in South Florida and make incursions into hubs that larger carriers control, such as Dallas, Houston, Chicago and Atlanta, the airline said in a written statement. The combination would also allow JetBlue to enter new markets such as Memphis and Louisville.
While Spirit and Frontier are known for offering rock-bottom fares and layering on fees, JetBlue offers perks such as business class and free Wi-Fi—differences that JetBlue executives acknowledged in a memo to employees Tuesday.
“At first glance you may not think we’d make a great pair,” Mr. Hayes and JetBlue President Joanna Geraghty wrote in a memo to employees. “When you dig deeper, you’ll realize we could be a perfect match.”
The plan, the executives said in the memo, would be to retrofit Spirit’s planes to match JetBlue’s.
Spirit and Frontier had also said that they will be able to grow more quickly together than they would apart, allowing them to bring low-cost flights to underserved routes in the U.S., Latin America and the Caribbean and to challenge larger carriers.
Frontier said in a written statement that JetBlue’s proposal would lead to pricier travel and would limit competition, as JetBlue and Spirit overlap along the East Coast.
Any merger would need to pass muster with regulators, who have taken an aggressive stance on antitrust enforcement under the Biden administration. Spirit and Frontier have argued that their networks complement one another, with Denver-based Frontier’s strength in the Western U.S. and Florida-based Spirit’s larger presence in the East.
Some Democratic lawmakers have been skeptical of a merger between Spirit and Frontier, arguing in a letter to top antitrust and transportation officials last month that the deal would reduce competition and harm consumers.
JetBlue is facing scrutiny from the Justice Department over its partnership with American Airlines Group Inc. The Justice Department last year filed an antitrust lawsuit challenging that arrangement, alleging that it would suppress competition and lead to higher fares.
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