Spirit Airlines postpones shareholder vote on Frontier deal days after JetBlue sweetens offer
A JetBlue Airlines plane takes off near Spirit Airlines planes at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.
Spirit Airlines is postponing its shareholder meeting, previously scheduled for Friday, until June 30 so it can continue deal talks with Frontier Airlines and JetBlue Airways, and with its stockholders, the carrier said Wednesday.
Shares of Spirit lost more than 2% on Wednesday, while Frontier’s fell more than 3% and JetBlue’s shed more than 4%, outpacing the broader market’s decline.
Spirit’s announcement came two days after JetBlue sweetened its offer for the discount airline, which has had a merger agreement in place with fellow budget carrier Frontier since February. Spirit shareholders were due to vote on the cash-and-stock Frontier deal at the shareholder meeting Friday. JetBlue urged Spirit stockholders to reject that merger.
Frontier and JetBlue both say they see Spirit Airlines as key to their future growth. Either combination would create the fifth-largest airline in the U.S.
Spirit has repeatedly rebuffed JetBlue’s offers and said that an acquisition would be unlikely to pass muster with regulators, while JetBlue has contended both deals would face scrutiny from the Justice Department.
JetBlue had previously offered to divest Spirit’s assets in New York and some in Florida to make the deal more palatable to regulators. The company said access to Spirit’s Airbus order book and pilots would “turbocharge” its growth to better compete with large airlines.
JetBlue on Monday raised its offer for a reverse breakup to $350 million if the Justice Department were to block its purchase of Spirit. Frontier last week offered a $250 million reverse breakup fee, payable to Spirit shareholders, if that deal is knocked down by regulators.
“We welcome this development as a necessary first step toward genuine negotiation between the Spirit Board and JetBlue,” JetBlue CEO Robin Hayes said in a statement Wednesday. “Spirit shareholders are clearly urging the Spirit Board to engage with us constructively and provide us with the same information previously made available to Frontier so that we can reach a consensual transaction.”
Spirit is still bound by its merger agreement with Frontier and the company’s board hasn’t determined that JetBlue’s offer is superior to the existing deal, Spirit CEO Ted Christie said in a note to staff Wednesday. Spirit didn’t immediately respond to JetBlue’s claim that Spirit shareholders are urging the company to engage with JetBlue.
Proxy advisory firm Glass Lewis last week recommended shareholders vote in favor of the Frontier deal while another firm, ISS, said they should reject it.
“As our Board pursues the course of action that is in the best interests of our stockholders, they will also continue to prioritize the best interests of our Team Members and Guests,” Spirit CEO Ted Christie said in the note to staff. Frontier declined to comment.
This article originally appeared on CNBC