Budget airline to weigh offer
JetBlue Airways’ surprise, unsolicited bid for budget airline Spirit got a boost late Thursday when Spirit…
JetBlue Airways’ surprise, unsolicited bid for budget airline Spirit got a boost late Thursday when Spirit said it will talk to the New York-based airline.
In a statement, Spirit said its board of directors has determined, in consultation with its advisors, to “engage in discussions” with JetBlue.
The airline, which announced a merger with fellow budget airline Frontier in February, said the discussions with JetBlue will be held in “accordance with terms of the company’s merger agreement with Frontier.”
JetBlue executives earlier this week called its offer superior to Frontier’s but on Thursday Spirit said its board has not yet determined if JetBlue’s offer is a “superior proposal,” legal lingo in the merger agreement that would trigger payouts to Frontier.
Despite initiating talks with JetBlue, Spirit said its board has “made no change” to its recommendation that Spirit shareholders adopt the merger agreement with Frontier.
JetBlue welcomed the news.
“We are pleased the Spirit board recognizes the compelling value for all stakeholders that JetBlue has offered,” Robin Hayes, JetBlue’s chief executive officer, said in a statement. “We believe JetBlue is the best partner for Spirit, and we look forward to engaging with the Spirit board to finalize our combination, to create a national low-fare challenger to the four large dominant U.S. carriers that will result in lower fares and better service for customers.”
USA TODAY reached out to Frontier for comment.
Spirit and Frontier have similar business models, offering cheap tickets and charging extra for everything from seat assignments to boarding pass printing at the airport. The airlines have not said which airline’s name or plane paint style would survive the merger or who would run the combined airline.
BUDGET AIRLINE BONANZA: What Spirit-Frontier merger would mean for fares, fees
Spirit and JetBlue are seen as more of an odd couple given JetBlue’s generous inflight perks including extra legroom, free Wi-Fi, free live TV and trendy snacks. If the deal went through, JetBlue said Spirit would be absorbed into JetBlue, with seats taken out of its planes to conform with JetBlue’s roomier configuration.
Analysts say that pricey plane conversion can’t be done without raising fares. Already, JetBlue’s fares are higher than Spirit’s on some competing routes. For a June trip from Fort Lauderdale to New York, Spirit’s cheapest fare is $156, compared with $289 on JetBlue. The latter is for a JetBlue basic economy ticket.
“At the end of the day, our intention is to offer fares that are equally competitive to what Spirit offers,” JetBlue President Joanna Geraghty said in an interview Wednesday.
Both JetBlue and Frontier say a deal with Spirit would create a powerhouse national low-fare airline that would be able to better compete with the country’s big four airlines: American, Delta, United and Southwest.
Frontier on Tuesday criticized that notion, calling JetBlue a high-fare airline.
“Unlike the compelling Spirit-Frontier combination, an acquisition of Spirit by JetBlue, a high-fare carrier, would lead to more expensive travel for consumers,” the Denver-based airline said in a statement.
