Spirit's board still against JetBlue take over deal

The board of the budget airline Spirit has yet again rejected the advances of JetBlue,  in favour of a takeover bid from Frontier.  The low-cost airline's bosses are still claiming that the JetBlue deal would face substantial regulatory hurdles, especially while the Northeast Alliance NEA with American Airlines remains in effect. The U.S. Department of Justice (DOJ) is currently suing JetBlue and American Airlines, alleging that the NEA is anti-competitive. Spirit is opposed to the NEA on grounds that it is anti-competitive,  Spirit does not believe the DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier (American) and then undertake an acquisition that will eliminate the largest ULCC carrier in the U.S. (Spirit).

In response, JetBlue issued the following statement  'It’s no surprise that Spirit shareholders are getting more of the same from the Spirit Board. The Spirit Board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.

Regarding regulatory approval, Spirit would have you ignore the current regulatory climate to think that approval of their Frontier deal is assured. That is simply not true. Both deals are subject to regulatory review, and both deals have a similar risk profile. Spirit shareholders recognize that and are showing great interest in hearing more about our superior offer and the regulatory commitments and protections we have made, including a reverse break-up fee.

Frontier offers less value, more risk, and no regulatory commitments, despite a similar regulatory profile. We are confident that as we continue to share the facts directly with Spirit shareholders, they will be even more perplexed than they already are about why the conflicted Spirit Board has refused to negotiate with us in good faith. We believe that the Spirit shareholders will make their views known by voting against the Frontier offer and tendering their shares into our offer.'

Which way Spirit's shareholders will go remains to be seen, however, if nothing happens and Spirit is left to flounder, it will be toast before the end of this year. The company has more debts than it can realistically cope with, it is running at a loss and some of its legal fees are being picked up by another airline entity. Its management has been making calls with the senior leadership of another mega-carrier and has effectively not been completely honest with shareholders, as the merger or takeover by Frontier would also face anti-competition opposition and investigation from authorities.  

From the outside, it would seem like Spirit's board is acting against the company's and shareholders' interests, one might even say there is a whiff of dishonesty in the air, oh how that aroma of corruption seems to linger. However,  that's not to say the JetBlue deal would present problems, even if it did go through.  It would be an uphill battle for the New York based airline to win the hearts and minds of Spirit employees that have been poisoned against JetBlue and everything it stands for.  The reputation of JetBlue hangs in the balance either way, which is something that costs millions and takes decades to achieve, but only moments to lose. 

 

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