JetBlue makes an offer to Spirit Airlines before a shareholder vote

JetBlue Airways again increased its offer to Spirit Airlines with a shareholder vote for the discount company’s agreement to merge with Frontier Airlines just days away.

Frontier became its offer on Friday. Spirit’s CEO Ted Christie then told CNBC that Spirit’s board still found the agreement to combine with other budget airlines Frontier as a superior alternative than joining JetBlue.

Spirit shareholders will vote on the Frontier cash-and-stock deal on Thursday; Spirit postponed the vote earlier this month to continue the contract talks with both airlines.

Both combinations would create the fifth largest American carrier. The heated bidding war underscores how both JetBlue and Frontier see Spirit as the key to their future growth plans at a time when aircraft and pilots are in short supply.

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.

Leslie Josephs | CNBC

Spirit had claimed that it did not believe that a JetBlue agreement would pass with regulators, especially because of the alliance with American Airlines in the Northeast.

«After Spirit Board failed to recognize our crucial superior offer, we have discussed our offer directly with the Spirit shareholders and are now changing our proposal in response to the shareholders’ expressed interest, to include a monthly payment to the shareholders, with the assurance of a significant cash prize on closing, “said JetBlue CEO Robin Hayes in a statement.

JetBlue’s new offer raises the reverse breakdown fee to $ 400 million from $ 350 million if regulators do not approve the deal and includes a dividend to Spirit shareholders of $ 2.50 per share, up from an earlier offer of $ 1.50.

It also includes a “mark-up fee” that will pay shareholders 10 cents per share each month from January 2023 through the completion or termination of the agreement.

Spirit shares were up 5% in the aftermath of the news, while JetBlues were less than 1% and Frontiers were up 1%. Spirit and Frontier shares fell sharply in ordinary trading.

On Friday, Frontier had increased the cash portion of its bid by $ 2 per share to $ 4.13 and raised its proposed reversal fee to $ 350 million, in line with JetBlue’s previous offer.

“We believe we have the most compelling offer for shareholders,” Frontier CEO Barry Biffle said in an interview earlier Monday. Biffle spoke from New York, where he plans to meet with Spirit shareholders this week before the vote on Thursday.

Frontier and Spirit did not immediately comment on the revised JetBlue offer.