I did not expect this! JetBlue puts in a competing bid for Spirit!
JetBlue Airways is competing with Frontier Group Holdings to buy ultra-low-cost Spirit Airlines, making an unsolicited all-cash bid of $33 per share, or $3.6 billion.
Frontier announced plans in February to buy Spirit for $2.9 billion in cash and stock, and become the nation's fifth-largest airline.
JetBlue said its offer is better for Spirit investors, coming in 37% higher than the value of Frontier's proposal. But Frontiers' proposal would let Spirit's shareholders keep a 48.5% stake in the merged carrier. Spirit said its board would weigh JetBlue's offer.
Frontier Chairman William Franke, who helped transform both Spirit and Frontier into ultra-discount carriers, has spent years hoping to merge them. Spirit and Frontier, known for rock-bottom fares, have said merging would bring low- cost flights to underserved markets in the U.S., Latin America and the Caribbean.
A Frontier spokesperson told Barron's that its deal would deliver "$1 billion in annual savings for consumers and offer even more ultra-low fares to more places nationwide, creating America's most competitive ultra-low fare airline."
The Justice Department last year sued to block JetBlue's partnership with American Airlines, saying it would reduce competition, limit options for customers, and lead to higher fares. Frontier on Tuesday pointed to JetBlue's " significant" East Coast overlap with Spirit.
Any merger would be scrutinized by regulators, who have increased their antitrust enforcement. Some Democratic lawmakers have argued against a Spirit-Frontier merger to antitrust and transportation officials, saying it would hurt consumers by reducing competition.
Write to Janet H. Cho at janet.cho@dowjones.com
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