Spirit delays vote on Frontier merger
CHICAGO: Spirit Airlines on Wednesday deferred a shareholder vote on Frontier Airlines’ merger offer for the budget carrier until next week.
Its shareholders had been scheduled to finalise their vote at a special meeting yesterday. The Florida-based carrier said the meeting would now reconvene on July 8.
This was the second time Spirit has delayed the vote, suggesting it had not convinced enough shareholders to back the deal, which is being contested by JetBlue Airways.
Spirit signed a cash-and-stock deal with rival Frontier in February to form a new no-frills airline and compete against big national carriers. In April, JetBlue jumped into the fray with an all-cash offer.
Since then JetBlue and Frontier have waged a bidding war. JetBlue’s bid is higher, but Spirit has said US regulators would stop that deal.
Frontier has expressed confidence the escalated price would not hurt its balance sheet.
“We have one of the cleanest balance sheets in the business,” Frontier chief executive officer Barry Biffle told Reuters. “This is not going to make a material difference to our leverage.”
A deal with Spirit would allow either bidder to create the fifth-largest US airline and expand its domestic footprint at a time when the the country’s airline industry is dogged by labor and aircraft shortages.
Spirit has repeatedly rejected JetBlue’s offer, citing the regulatory issues.
Still, New York-based JetBlue has been urging Spirit shareholders to vote against the Frontier deal. Its campaign forced Spirit to defer the shareholder meeting, originally scheduled for June 10.
On Wednesday, Spirit said its board would engage with both the bidders about their offers.
JetBlue responded to Spirit’s adjournment saying they now look forward to commencing “a constructive and substantive dialogue” with Spirit.
“We continue to strongly recommend that Spirit shareholders let the Spirit Board know that preventing their shareholders from receiving the superior value JetBlue has proposed is unacceptable, by voting against the Frontier transaction,” JetBlue said in a statement.
Shareholder advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have recommended voting for the Frontier deal, despite JetBlue’s higher offer price.
If shareholders reject the Frontier deal, Spirit has said it intends to remain independent. JetBlue also plans to pursue organic growth if its bid fails.
“With or without Spirit, our future is bright and at the core of our business we have a strong organic plan that will help us win in this changing world,” JetBlue CEO Robin Hayes said in a letter to the airline’s crewmembers.
Either proposed deal will likely face intense regulatory scrutiny.