JetBlue launches new offer for Spirit

CHICAGO: JetBlue Airways on Monday ratcheted up its bidding war with Frontier Airlines for Spirit Airlines as the race for the ultra-lowcost carrier enters the final stretch.

Both bidders see Spirit as an opportunity to expand their domestic footprints at a time when the US airline industry is dogged by labour and aircraft shortages. Either of the deals would create the fifth-largest US airline.

Under the new offer, JetBlue offered a “ticking fee,” which would give Spirit shareholders a monthly prepayment of 10 cents per share between January 2023 and the closing of the deal, raising the overall value of the deal to $34.15 per share.

The New York-based carrier also increased the break-up fee to Spirit by $50 million for a total of $400 million if the deal fails to get regulatory approval.

It will also prepay $2.50 per share as a cash dividend to Spirit stockholders following approval of the transaction.

The latest offer came after Frontier last Friday raised its bid for Spirit.

Frontier’s revised offer persuaded shareholder advisory firm Institutional Shareholder Services (ISS) to reverse its position and recommend Spirit shareholders back a merger with the Denver-based budget carrier.

Glass Lewis, another proxy firm, has also recommended the Frontier deal.

Spirit shareholders are due to vote on the merger deal with Frontier tomorrow.

Frontier chief executive officer Barry Biffle told Reuters on Monday the company’s revised offer for Spirit would be enough to secure a merger deal with the ultra-low-cost carrier.

“We’re really excited about it and getting good feedback,” he said.

JetBlue, however, is not ready to give up.

On Monday, it again urged Spirit shareholders to vote against the Frontier deal, saying its proposal “offers them more value and certainty.”