JetBlue Makes All-Cash Offer for Spirit Airlines

JetBlue Airways has made an all-cash offer of $3.6 billion for Spirit Airlines, which complicates Spirit’s deal to combine with rival discount carrier Frontier Airlines.

The bid comes less than two months after Spirit and Frontier agreed to merge into a discount airline giant.

Shares of Spirit were halted from trading before the market closed on Tuesday as shares had jumped over 22%.

Spirit said its board was evaluating JetBlue’s proposal and will “pursue the course of action it determines to be in the best interests of Spirit and its stockholders.”

JetBlue offered $33 a share in its unsolicited all-cash bid, Spirit and JetBlue said. The New York Times earlier reported JetBlue’s offer.

JetBlue shares closed down about 7%.

Spirit and Frontier both solely fly planes in the Airbus A320 family. Those aircraft make up the majority of JetBlue’s fleet.

JetBlue also has a large operation in Florida, where Spirit is headquartered. It said the combined airline would have 32,000 employees and would keep its headquarters in New York.

“We can all agree that Spirit has a very different brand and product than JetBlue, and so at first glance you may not think we’d make a great pair,” JetBlue CEO Robin Hayes and COO Joanna Geraghty wrote to employees after announcing the bid for Spirit.

“However, when you dig deeper, you’ll realize we could be a perfect match. After all, our strong belief has always been that Customers shouldn’t have to choose between a low fare and a great experience, and JetBlue is the only airline that offers both.”

“Once you have megacarriers with more than 1,000 aircraft after the backbone of the industry, then it’s appropriate for the No. 5 airline to beef up,” said Samuel Engel, senior vice president and aviation analyst at consulting firm ICF.

Frontier defended its deal to combine with Spirit and said an alternative tie-up with JetBlue would make travel more expensive.

“In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit options for consumers,” Frontier said. “It is surprising that JetBlue would consider such a merger at this time given that the Department of Justice is currently suing to block their pending alliance with American Airlines.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.