Spirit CEO wonders if JetBlue’s offer means blocking the Frontier deal

A JetBlue airliner lands in front of a Spirit Airlines jet in a taxi at Fort Lauderdale Hollywood International Airport on Monday, April 25, 2022. (Joe Cavaretta / Sun Sentinel / Tribune News Service via Getty Images)

Joe Cavaretta | Sentinel of the Sun | Getty Images

Spirit Airlines On Thursday, CEO Ted Christie laid bare the reasons his company refused JetBlue Airways$ 3.6 billion offer for the purchase of the ultra-low-cost carrierand went so far as to suggest that the offer may have been intended to stop Spirit’s planned merger with Frontier Airlines.

“JetBlue shareholders are not in favor of this deal either, based on the company’s equity performance. However, despite the clear concern of JetBlue shareholders, JetBlue has continued to pursue the discontinuation of the Spirit-Frontier combination,” Christie said during Spirit’s first quarter earnings call.

“I wondered if blocking our deal with Frontier is actually their goal,” Christie added.

JetBlue did not immediately respond to CNBC’s request to comment on Christie’s remarks.

In February, Spirit and Frontier announced plans to merge into what would create a huge discounted airline, the fifth largest carrier in the U.S. JetBlue’s unsolicited offering for Spirit, initially questioned that link. But on Monday, Spirit turned down JetBlue’s offer in favor of the Frontier deal, citing concern that a JetBlue acquisition would not remove regulatory hurdles.

JetBlue has a partnership with American Airlines in what is known as the Northeast Alliance (NEA) to better compete against the likes of United airlines Other Delta Airlines at the main airports. JetBlue claims that the acquisition of Spirit would help it compete further.

Christie pointed this out on Thursday the Department of Justice has already sued to block the JetBlue-American partnershipwhile underlining that “half of the expected synergies” of JetBlue Absorbent Spirit “would come from reduced capacity and an increase in tariffs for consumers”.

“You don’t have to be an antitrust attorney to see the problems here,” Christie said. “It extends any kind of common sense to believe that a JetBlue acquisition of Spirit would be approved by the DOJ while suing to block the NEA.”

Spirit said it had made a counter offer to JetBlue, including leaving the NEA with American, but JetBlue rejected the alternative proposal.

JetBlue CEO Robin Hayes wrote in a letter to Spirit CEO and its president on April 29 that his offer has a better chance of gaining regulatory clearance than the Frontier merger.

“We strongly believe that it is in your shareholders’ best interest to accept our proposal, which is significantly more likely to obtain regulatory clearance given our stronger regulatory commitment than Frontier,” Hayes later wrote.