Spirit, Frontier terminate deal that was marred by JetBlue’s rival bid

A Frontier Airlines airplane taxis past a Spirit Airlines aircraft at Indianapolis International Airport in Indianapolis, Indiana, on Monday, Feb. 7, 2022.

Luke Sharrett | Bloomberg | Getty Images

Spirit Airlines terminated its merger agreement with Frontier Airlines on Wednesday months after rival suitor JetBlue Airways‘ all-cash bid threw the planned tie-up into disarray.

Shareholders on Wednesday were set to vote only on the Spirit-Frontier combination, not a JetBlue takeover, though the New York-based airline spent weeks urging shareholders to turn the deal down.

A JetBlue takeover of Spirit or a Spirit-Frontier combination would create the country’s fifth-largest carrier. A rejection of the Frontier deal is a blow to the discount carriers that planned to combine forces into a budget behemoth.

Spirit had postponed the shareholder vote four times as it struggled to drum up enough shareholder support.

Frontier’s CEO, Barry Biffle, called its latest sweetened offer its “best and final” in a July 10 letter to his Spirit counterpart and said: “We still remain very far from obtaining approval from Spirit stockholders.”

The termination of the Spirit-Frontier deal could make it easier to get to a takeover deal done with JetBlue, which is seeking to buy the budget airline outright for about $3.7 billion and refurbish its planes in JetBlue style, featuring seatback screens and legroom. Talks are ongoing according to a person familiar with a matter, but could still fall apart.

Spirit’s board repeatedly rebuffed JetBlue’s increasingly sweetened offers, arguing that it was unlikely that regulators would approve the takeover.

It is possible that no deal gets done. Either transaction faces a high hurdle for the Justice Department’s blessing because the Biden administration has vowed to crack down on consolidation.

Executives for all three airlines said their preferred deal would help them compete better with the top four U.S. carriers — American, Delta, United and Southwest — which control about three-quarters of the domestic market.

Spirit, however, has raised concerns about a JetBlue takeover because of that airline’s alliance with American in the Northeast, a partnership the Justice Department last year sued to undo.