The board of JetBlue seem so utterly convinced that buying Spirit will boost their business so much they are completely blinkered by the damage they are doing to their reputation by the constant bickering in public. The financial damage just keeps on going with the repeated increases in prices JetBlue offers for Spirit means they are now willing to pay nearly double what Spirit is worth and almost every analyst we've approached thinks this is a bad deal - not for Spirit, but for JetBlue. "Unless there is something very drastic hidden in the private disclosure documents, the current deal is like mana from heaven for Spirits shareholders, for JetBlue..well if it goes through it could bring the company crashing down." one business analyst from Barclays told us.
JetBlue says "We continue to believe JetBlue’s proposal is decisively superior to the Frontier transaction, even considering its revised terms, and it continues to offer Spirit shareholders significantly more value, more cash, more certainty, and more regulatory protections. JetBlue offers $33.50 per Spirit share in cash, a very significant 38%1 premium to the implied market value of the amended Frontier transaction. Also, importantly the incremental $2.00 per Spirit share offered by Frontier are effectively being paid by Spirit shareholders through their ownership in the combined company, therefore resulting in only approximately $1 of incremental economic value."
They continue, in a bitter attack on Spirit's board, which is likely to anger and inflame tensions, not with those high up, but those in middle management and the vast majority of workers at the Spirit - the very staff JetBlue would need to turn the firm around. "The conflicted Spirit Board continues to rely on a series of mischaracterizations to justify an inferior deal – about the regulatory situation, that is at odds with the views of outside experts that our transaction can get done; about the Northeast Alliance, despite the overwhelming facts supporting its pro-competitive nature; and about the impact of the changing industry environment, including competition for pilots. Adding to these misrepresentations, the Spirit Board is now claiming they have served their shareholders by accepting a revised Frontier proposal, an act which does not change the fundamental superiority of our transaction, agreeing, among other things, in exchange for underwhelming financial concessions, to weaken Spirit shareholders’ governance in the combined company through less board representation." JetBlue's statement concludes.
JetBlue should have walked away months ago, Spirit was a good target for a takeover, at a reasonable price, and now JetBlue is offering to pay for a brand new Ferrari but getting a second-hand Chevrolet Spark, with a flat tyre. It doesn't make sense unless this is a proxy war, Delta quietly pulling the strings behind Frontier and Spirit and American Airlines behind JetBlue?
Yet either way, it is damaging the JetBlue brand, a group of seven UK-based travel arrangement companies have moved away from offering JetBlue's transatlantic services for their New York and New England holidays. "We'll only sell JetBlue if a customer specifically asks for them now, we've moved most of our customers to British Airways or United for Boston." a senior manager told us on Friday.
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