Spirit Shareholders to Decide Fate of Frontier Offer as JetBlue Looms

Frontier Chief Executive

Barry Biffle

acknowledged in a letter to Spirit earlier this month it was “very far” from winning over Spirit’s shareholders, and asked Spirit to delay the vote, even as he said Frontier had made its best and final offer.

Losing out on a deal to buy Spirit would be a defeat for Frontier and its chairman,

William Franke,

who has long been angling to join the two discount airlines into a budget behemoth. It would also clear the way for Spirit to agree to an acquisition by JetBlue, which has been trying to upend the Frontier merger in favor of its own proposal. Talks between JetBlue and Spirit have been ongoing, according to people familiar with the matter.

Spirit and Frontier announced their plans to merge in February in a cash-and-stock deal that was valued at about $2.9 billion at the time. Less than two months later, JetBlue lobbed a competing offer for Spirit——a move that JetBlue said it had been considering since before the pandemic but that took many in the industry by surprise.

What followed was a monthslong contest that has become the airline industry’s most contentious battle in years. By absorbing Spirit, Frontier and JetBlue have each been vying to secure their position as the fifth-largest U.S. airline, taking on the four major carriers that dominate the industry in the U.S.

Spirit rebuffed JetBlue several times, opting to stick with a deal with Frontier that it said has a better chance of passing muster with antitrust regulators and would be better for investors in the long run as the industry recovers from the pandemic.

JetBlue was undeterred, launching a hostile takeover bid and sweetening its all-cash offer multiple times. In its campaign against the Frontier bid, JetBlue has argued that both combinations face similar regulatory risks. Its offer is now worth $3.7 billion in cash, about $1 billion more than the value of Frontier’s mostly stock offer as of Tuesday’s close.

Institutional Shareholder Services, an influential proxy advisory firm, has gone back and forth, and most recently advised Spirit investors to vote against the Frontier deal in favor of what it said was a superior offer from JetBlue.

For Frontier, losing out on Spirit would be a setback, but the Denver-based carrier will likely still remain in a strong position if Spirit ends up in JetBlue’s hands, industry analysts have said. With its main competitor out of the picture, Frontier would be the biggest remaining carrier in the niche of fast-growing budget airlines known as ultralow cost carriers.

Write to Alison Sider at alison.sider@wsj.com

Frontier Chief Executive

Barry Biffle

acknowledged in a letter to Spirit earlier this month it was “very far” from winning over Spirit’s shareholders, and asked Spirit to delay the vote, even as he said Frontier had made its best and final offer.

Losing out on a deal to buy Spirit would be a defeat for Frontier and its chairman,

William Franke,

who has long been angling to join the two discount airlines into a budget behemoth. It would also clear the way for Spirit to agree to an acquisition by JetBlue, which has been trying to upend the Frontier merger in favor of its own proposal. Talks between JetBlue and Spirit have been ongoing, according to people familiar with the matter.

Spirit and Frontier announced their plans to merge in February in a cash-and-stock deal that was valued at about $2.9 billion at the time. Less than two months later, JetBlue lobbed a competing offer for Spirit——a move that JetBlue said it had been considering since before the pandemic but that took many in the industry by surprise.

What followed was a monthslong contest that has become the airline industry’s most contentious battle in years. By absorbing Spirit, Frontier and JetBlue have each been vying to secure their position as the fifth-largest U.S. airline, taking on the four major carriers that dominate the industry in the U.S.

Spirit rebuffed JetBlue several times, opting to stick with a deal with Frontier that it said has a better chance of passing muster with antitrust regulators and would be better for investors in the long run as the industry recovers from the pandemic.

JetBlue was undeterred, launching a hostile takeover bid and sweetening its all-cash offer multiple times. In its campaign against the Frontier bid, JetBlue has argued that both combinations face similar regulatory risks. Its offer is now worth $3.7 billion in cash, about $1 billion more than the value of Frontier’s mostly stock offer as of Tuesday’s close.

Institutional Shareholder Services, an influential proxy advisory firm, has gone back and forth, and most recently advised Spirit investors to vote against the Frontier deal in favor of what it said was a superior offer from JetBlue.

For Frontier, losing out on Spirit would be a setback, but the Denver-based carrier will likely still remain in a strong position if Spirit ends up in JetBlue’s hands, industry analysts have said. With its main competitor out of the picture, Frontier would be the biggest remaining carrier in the niche of fast-growing budget airlines known as ultralow cost carriers.

Write to Alison Sider at alison.sider@wsj.com