Spirit Airlines rejects Jetblue, still plans Frontier merger

Spirit Airlines on Monday rebuffed an acquisition offer from Jetblue Airways, saying regulators were unlikely to approve the proposal.

In a letter to Jetblue, Spirit executives said they had determined that Jetblue’s acquisition offer, which was updated Friday, would be unlikely to secure regulatory approval as long as that airline’s recently announced partnership with American Airlines

was in effect. The Justice Department and several states have sued to block that alliance, arguing that it is anti-competitive, and Jetblue has said it will not abandon the partnership.

In a statement Monday, the chairman of Spirit’s board, Mac Gardner, said the company stood by its plan to merge with Frontier Airlines, a deal that predates Jetblue’s offer and that Spirit argued reflected the best interests of long-term shareholders.

Spirit and Frontier, both lowfare airlines, announced a plan to merge in February. Then Jetblue stepped in with a bigger offer for Spirit, surprising many industry analysts and experts. Both deals would face scrutiny from Biden administration regulators, who have expressed more skepticism about consolidation than their predecessors.

Some analysts contend that Spirit and Frontier are better suited to merge because they operate under similar “ultra-lowcost” business models but have more extensive flights in different parts of the United States. A

Jetblue-spirit combination could be more difficult to pull off because the airlines’ business models are quite different. But the deal could allow Jetblue to compete more effectively against the nation’s four dominant airlines.

Jetblue’s updated offer added a handful of concessions to address Spirit’s concerns about regulatory approval, including an offer to divest some assets from both airlines. Jetblue also said it would commit to divesting Spirit assets in New York and Boston, markets at the heart of Jetblue’s partnership with American, known as the Northeast Alliance, in an effort to win approval from the Justice Department. Jetblue also said it would pay Spirit a $200 million fee if antitrust regulators blocked the deal.

Jetblue said in response that its offer and the Frontier deal shared “a similar regulatory profile” but that Frontier had not offered to divest assets or pay a breakup fee. Jetblue also said the value of Frontier’s cash-andstock deal had faded because of that airline’s falling stock price.