JetBlue has made an unexpected bid to buy Spirit Airlines, a move that could potentially jeopardize Spirit’s merger with Frontier, The New York Times reported on Tuesday.
The Times estimates the deal at $3.6 billion, which easily outbids Frontier’s cash and stock offer for Spirit.
JetBlue stated that the combined company would preserve the JetBlue moniker and continue to be headquartered in New York. The Spirit fleet would be renamed and retrofitted to look like JetBlue aircraft, bringing “a superior onboard experience to Spirit customers.”
“This is about really allowing a bigger JetBlue to compete against four large legacy airlines, bringing the JetBlue experience to more customers, bringing more JetBlue flights into high-fare legacy hub airports, and offering real competition,” said JetBlue CEO Robin Hayes.
Spirit has stated that it plans to review the offer, which it called “unsolicited,” and “would respond in due course.”
After the news of JetBlue’s offer, Frontier released a statement saying that the acquisition would limit options and potentially harm customers.
Whoever wins, Spirit’s acquisition expenses will likely rise. The deal equates to about 40% more than Frontier’s initial offer, and now Frontier officials must determine whether or not to raise their bid to compete with JetBlue.
Former airline CEO and aviation analyst Robert W. Mann says if JetBlue’s offer is accepted, it will have to pay much more for the planes and other items.
The costs of combining labor forces and renovating Spirit jet cabins with wider seats and live-television-enabled in-flight entertainment for each seat would be borne by JetBlue.
“It’s a very expensive proposition, and it gravitates higher and not lower,” said Mann. “They’re gonna pay twice on that. Once on the purchase and twice on the integration.”
If JetBlue makes a bid, Frontier is not confident U.S. authorities will approve it, seeing as the Department of Justice has sued JetBlue over the Northeast Alliance. The ongoing lawsuit was filed to block JetBlue from forming a pending domestic partnership with American Airlines.
“Unlike the compelling Spirit-Frontier combination, an acquisition of Spirit by JetBlue, a high-fare carrier, would lead to more expensive travel for consumers,” Frontier said in a statement.
