May 2 (UPI) — Spirit Airlines won’t be bought out by JetBlue Airways after turning down the New York City-based airline’s $3.6-billion acquisition offer on Monday in favor of a Frontier Airlines merger.
Spirit’s board of directors rejected JetBlue’s revised April 5 buyout offer in a statement, saying that the company’s proposed deal was not a “superior proposal” to Spirit’s existing agreement with Frontier.
The budget carrier’s board made the decision after discussions with antitrust advisors and economic consultants for both Spirit and JetBlue over the past month.
The board said in a statement that JetBlue’s proposal “falls short” of being “reasonably capable of being consummated,” read the statement from Spirit’s board chairman H. McIntyre Gardner and CEO Edward Christie.
“We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue’s Northeast Alliance with American Airlines remains in existence,” read the statement addressed to JetBlue’s CEO, Robin Hayes.
“The U.S. Department of Justice, along with attorneys general in six states and the District of Columbia, have sued to block the NEA, alleging that the alliance ‘will not only eliminate important competition in (Boston and New York City), but will also harm air travelers across the country by significantly diminishing JetBlue’s incentive to compete with American elsewhere, further consolidating an already highly concentrated industry,'” continued statement published on Spirit’s website.
A Spirit-JetBlue merger would have expanded JetBlue’s flight coverage across the United States, the Caribbean and Latin America, but would have eliminated the Spirit brand entirely as JetBlue absorbed the Florida-based budget carrier’s operations.
JetBlue responded to Spirit’s concerns on April 29, which did not seem to be enough to sway the board of directors away from the Frontier deal.
“That response makes clear that JetBlue is unwilling to terminate the NEA — or to agree to any other remedies that might materially decrease the expected benefits to JetBlue from the NEA — to obtain clearance for an acquisition of Spirit,” according to the statement.
Denver-based Frontier’s $2.9-billion bid to buy Spirit would create the fifth-largest U.S. carrier, in a deal that is worth $6.6 billion overall.
Both airlines’ boards have unanimously approved the deal, which is expected to close by the end of this year.