Spirit still prefers bid from Frontier Airlines over JetBlue

Spirit Airlines said Monday that it still supports Frontier Airlines’ $2.9 billion takeover bid for the airline, saying it was more likely to win regulatory approval than JetBlue’s competing $3.6 billion offer.

Spirit said antitrust regulators are unlikely to approve JetBlue’s offer because of JetBlue’s alliance with American Airlines in the Northeast, a deal that the Justice Department is suing to block.

“We struggle to understand how JetBlue can believe” that the Justice Department or a court would let JetBlue strike a deal with American, then buy Spirit, eliminating the nation’s largest low-cost airline, the Spirit board said in a letter to JetBlue directors.

JetBlue rejected Spirit’s view, especially after promising last week to make concessions designed to assure regulatory approval of its offer. JetBlue’s CEO seemed to raise the possibility of a hostile takeover bid.

Shares of Miramar, Florida-based Spirit sank more than 9%. New York-based JetBlue’s stock gained nearly 3%, while shares of Denver-based Frontier fell 4%.

The development was a reversal from last month, when Spirit said that after speaking with financial and legal advisers, its directors believed JetBlue’s offer could “reasonably” turn out to be the better of the two deals.

Spirit said its board unanimously continues to back the bid made by Frontier in February.

The JetBlue-American cooperative venture in Boston and New York, called the Northeast Alliance or NEA, was opposed by Spirit and other competitors long before Frontier’s February bid to buy Spirit.

JetBlue tried to satisfy regulatory concerns by offering to divest Spirit’s airport gates and takeoff and landing slots in New York and Boston and maybe in Fort Lauderdale, Florida. However, Spirit’s board said Monday that the revised offer is unlikely to appease regulators because the revised offer still “makes clear that JetBlue is unwilling to terminate” the partnership with American.