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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

JetBlue makes offer for Spirit Airlines, could spark bid war

 (Associated Press)
By David Koenig Associated Press

JetBlue Airways has offered to buy Spirit Airlines for about $3.6 billion and break up a plan for Spirit to merge with rival budget carrier Frontier Airlines.

Spirit said Tuesday that its board will evaluate the JetBlue bid and decide what’s best for its shareholders.

JetBlue offered $33 per share in cash, which would be about 40% higher than Frontier would pay for Spirit under terms of a deal announced in February. Frontier’s offer in cash and stock was worth $2.9 billion when it was announced, but Frontier’s shares have fallen since then, reducing the value of the deal to Spirit shareholders.

Shares of Florida-based Spirit soared 22% after The New York Times first reported the JetBlue bid Tuesday.

In a statement, New York-based JetBlue said combining with Spirit would lead to lower fares by creating “the most compelling national low-fare challenger” to the nation’s four biggest airlines: American, Delta, United and Southwest.

Denver-based Frontier used that same argument to support its acquisition of Spirit.

A Frontier-Spirit tie-up would combine Frontier’s route map in the western United States with Spirit’s network along the East Coast and the Caribbean. Both are discount airlines that offer rock-bottom fares and make up some of the difference by charging extra for many things that bigger airlines include in the ticket price, including carry-on bags and soft drinks.

JetBlue is not the same kind of so-called ultra-low-cost-carrier, and its base fares are often slightly higher than Frontier and Spirit. JetBlue’s strength on the East Coast, including Florida, would mean much more overlap with Spirit.

Moreover, Frontier and Spirit are small enough that their deal might not get close scrutiny from antitrust regulators. Those same regulators already weighed in last year to try to block a much more limited partnership between JetBlue and American Airlines – that challenge is pending.

One area where all three are similar: consumer complaints. Spirit had the highest rate of complaints to the U.S. Transportation Department last year, followed by JetBlue and Frontier.