JetBlue Airways said it had made a $3.6 billion bid for low-cost carrier Spirit Airlines. This has the potential to thwart the planned merger between Frontier Group Holdings and Spirit.
In February, Frontier and Spirit proposed a merger that would create the fifth-largest US airline. Frontier's offering will value Spirit at $24.93 per share at the closing price for Frontier shares Tuesday. Frontier's offering was 1,9126 shares and US$2.13 cash for each Spirit share.
Spirit shares rose 22% after the announcement, their highest level since mid-February. Airline stocks have suffered as air travel has fallen dramatically during the Covid-19 lockdown.
Quoting Reuters Wednesday (6/4), JetBlue said the deal when completed was expected to generate US$600 million to US$700 million in net annual synergies and the combined airline was projected to have annual revenues of around US$11.9 billion based on 2019 revenue.
JetBlue, the sixth-largest US carrier, said the partnership would position JetBlue as the most attractive national low-fare challenger to the four dominant US carriers and argued that its presence in more markets would trigger far greater fare reductions from legacy carriers.
“Spirit's customer service often faces criticism. Customers don't have to choose between a low rate and a great experience, and JetBlue has shown it's possible to have both," said JetBlue Chief Executive Officer Robin Hayes.
Frontier said the plan was given the Justice Department is currently suing to block JetBlue's pending alliance with American Airlines.
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