JetBlue Airways said on Tuesday it had made an unsolicited $ 3.6 billion bid for Spirit Airlines, which could jeopardize merger plans between a low-cost carrier and Frontier Group Holdings.
JetBlue chief executive Robin Hayes said the deal would make New York-based airlines a strong competitor to the so-called four-legged American airlines that control about 80% of the American passenger market.
JetBlue, the sixth largest passenger transport company in the U.S., will operate Spirit under the JetBlue brand and does not think anything is needed.
The move comes as airlines face higher fuel and labor costs, and are working to attract more tourists, who are returning faster than business travelers since the epidemic's relaxation limits were relaxed.
JetBlue offered $ 33 per share of total revenue, about 33% higher than Frontier's gift of 1.9126 shares and $ 2.13, which would cost Spirit $ 24.93 per share as the closing price on Tuesday.
Air shares closed 22% at $ 26.92, its highest level since mid-February. The 52-week high for Sprit is $ 39.19. Just before the closure of the COVID-19 spread, Air shares traded for about $ 45.
Spirit declined to comment beyond the written statement that he will review the proposal.
Hayes said he expected a strong review of the infidelity from the US Department of Justice that could last until 2023.
"We've had unprecedented numbers of integration, approved by the DOJ and now it's about how we ensure we can all continue to punish carriers and create that competition," Hayes said. "We believe this is the best deal that will improve a lot of competition."
Andre Barlow of Doyle, Barlow and Mazard PLLC said Biden management was "concerned about the consolidation that could lead to higher prices. This affects consumers, so I think you're getting a tough look."
The Department of Justice declined to comment.
The department filed a defamation suit last September against American Airlines and JetBlue over their co-operation, claiming it would lead to higher boarding rates at busy North-east U.S. airports. Hayes said JetBlue was "very committed" to the American coalition regardless of whether it succeeded in getting the Spirit.
Hayes said he expects the American Airlines case to be finalized before the Air Force review is finalized.
He spoke to analysts and reporters at 8am ET on Wednesday to suggest a proposal that would improve the performance of key markets such as Florida and access to limited airports such as Atlanta, Detroit, Miami and Chicago.
Meanwhile, Frontier said it was "surprising" that JetBlue would consider such a merger at this time as the Department of Justice is currently suing to block their alliance with American Airlines. The American did not immediately comment.
JetBlue said the agreement, once finalized, is expected to bring in $ 600- $ 700 billion of synergies a year and that the combined airline is expected to have an annual turnover of about $ 11.9 billion based on 2019 revenue.
Frontier said its offer of Spirit "is a great benefit to buyers and shareholders and will bring $ 1 billion annually to consumers' savings" and argued that "significant East Coast mergers between JetBlue and Spirit will reduce competition and limit consumer options."
In February, Frontier and Spirit proposed a merger that would form the fifth largest US airline.
Spirit's customer service often faces criticism and the airline has canceled 35% of its flights on Monday due to weather problems.
"We don't think customers should choose between lower fares and better information - they should have both," said Hayes, noting that JetBlue's presence in the market often encourages large airlines to lower airline prices to what they call the "JetBlue Effect." big ones don’t always lower ride prices to match prices from more expensive network companies like Spirit or Frontier.
The Spirit-Frontier Agreement has met with criticism from some lawmakers and civil society organizations in March that the merger between carriers will "eliminate competition in the highly competitive segment of the highly integrated aviation industry."
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