Skift Travel News Blog

The largest flight attendants union, the Association of Flight Attendants-CWA, is backing the proposed $3.8 billion merger of JetBlue Airways and Spirit Airlines as part of a new agreement with the latter carrier.

“The JetBlue-Spirit merger adds competition to the airline industry that creates more power for workers, along with choice and comfort that benefits consumers,” AFA President Sara Nelson said Tuesday. “We urge regulators to work diligently to ensure the financial merger closing occurs in the near term so that flight attendants, other workers, and consumers can access the benefits of the merger as soon as possible.”

AFA represents the roughly 5,600 flight attendants at Spirit. JetBlue’s more than 4,800 flight attendants are represented by the Transport Workers Union, or TWU.

Labor support for the merger is not a guarantee that the U.S. Department of Justice, which handles antitrust matters, will approve the deal. Reports indicate that the regulator intends to block the JetBlue-Spirit combination, and JetBlue CEO Robin Hayes said Tuesday that the carrier was ready “to go to court” if it had too to get the deal done.

However, labor backing of a merger can make the integration process go more smoothly once the deal closes.

AFA’s support for the merger came as part of a new two-year accord with Spirit. The tentative agreement, which flight attendants still must vote on, also includes pay raises of 10-27 percent upon ratification.

The U.S. Department of Justice is expected to sue to block the proposed merger of JetBlue Airways and Spirit Airlines, Politico reported late Friday.

The move was not unexpected given the Biden administration’s public position against large mergers in already consolidated industries. Four airlines — American, Delta, Southwest, and United — control nearly 80 percent of the U.S. market.

JetBlue has argued that its deal to buy Spirit for $3.8 billion would create a stronger competitor to its big four competitors. The combined carriers would have roughly a 9 percent share of U.S. domestic traffic, and be the fifth largest in the country. On Thursday, JetBlue outlined at least eight new routes the combined airlines could potentially add.

“This isn’t Pepsi and Coke merging,” JetBlue President and Chief Operating Officer Joanna Geraghty told Reuters on Wednesday.

The DOJ’s suit, which Politico reported could come as soon as March, is not necessarily the end of the deal. The regulator similarly moved to block the merger of American and US Airways in 2013 before reaching an out-of-court settlement that allowed the merger to go forward several months later.

Spirit shareholders approved the deal in October, after JetBlue beat Frontier Airlines in a bidding war for Spirit last July.

The JetBlue Airways and Spirit Airlines merger is a step closer to reality with the approval of the latter’s shareholders Wednesday.

Investors in Miramar, Florida-based Spirit approved the $3.8 billion deal with more than 50 percent voting in favor. Shareholder approval was a key, though not final, step in merging the U.S.’ sixth and seventh largest airlines.

“Today’s vote is a major milestone in our plan to join with Spirit to create a high-quality, low-fare national challenger,” a JetBlue spokesperson said.

JetBlue and Spirit still must secure regulatory approval from the U.S. Justice Department before the merger can close. That is far from a guarantee with the Biden administration taking a firm stance against consolidation in major industries, and for additional competition.

Both JetBlue and Spirit argue that by merging they will be a more formidible competitor to the largest U.S. carriers — American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. But the combination would also remove the country’s largest budget airlines, Spirit, leaving the market entirely to smaller Frontier Airlines.

In July, Frontier lost a bidding war with JetBlue for Spirit.

JetBlue and Spirit hope to secure regulatory approval and close their merger by the first half of 2024.

Frontier Airlines CEO Barry Biffle thinks his airline’s outlook is better than ever after JetBlue Airways beat it in a bidding war for budget competitor Spirit Airlines.

“Ninety-five percent of U.S. capacity will be 30 to 80 percent higher cost than us,” Biffle said in an interview Thursday. One of his main focuses at Frontier is using low costs as a competitive advantage and, by JetBlue buying Spirit and bringing it up to the former’s cost levels, many see the deal as an elimination of Frontier’s main low-cost competitor in the U.S.

Airlines compare their expenses using the metric unit costs — measured by costs per available seat mile — excluding fuel. In the second quarter, Frontier’s unit costs excluding fuel were 7.24 cents, Spirit’s were 6.96 cents, and JetBlue’s were 9.68 cents. Put another way, JetBlue’s costs are 33 percent higher than those at Frontier. The combination of JetBlue and Spirit will leave Frontier as one of the only airlines serving major markets with very low costs in the U.S.

Asked about potential cost pressure from new pilot pay deals at certain U.S. regional airlines, Biffle was unconcerned and said Frontier can offer cockpit crew members better pay over their career, as well as a better work-life balance than the regionals can. Frontier, he added, is in “good shape” when it comes to a supply of pilots.

With low costs in mind, Frontier is moving ahead with aggressive expansion plans. The airline intends to grow capacity by double digits annually through the end of the decade, Biffle said. Frontier aims to triple in size by 2030.

JetBlue Airways may have won over the board and management of Spirit Airlines in its bidding war with competitor Frontier Airlines for the discounter. But JetBlue still needs to sway shareholders before the deal can move forward.

Spirit has scheduled an October 19 shareholder meeting for a vote on JetBlue’s $3.8 billion takeover offer. Investors in the airline have been down this road before with Spirit scheduling and either postponing or suspending four previous meetings on Frontier’s failed offer.

But even if Spirit shareholders approve the JetBlue offer as is expected, the merger still has a steep hill to climb with the Department of Justice. The regulator, whose approval is key to the combination, has yet to weigh in on the merger that would remove a budget competitor from the U.S. market, and make JetBlue the fifth largest domestic player.

Shareholder group Institutional Shareholder Services (ISS) is advising investors in Spirit Airlines to vote against a proposed merger with Frontier Airlines.

“The proposal from JetBlue appears to represent a superior alternative,” ISS said in a report Friday. “Shareholders are therefore recommended to vote AGAINST the proposed merger with Frontier.”

The recommendation is a reverse of ISS’ last advisory for a Frontier merger on June 24.

Frontier CEO Barry Biffle, in a letter to Spirit CEO Ted Christie on July 10, said they were “very far” from garnering shareholder support for the Spirit-Frontier combination. He added that Frontier would not “propose any further modifications to the financial terms” of its merger proposal, which was valued at roughly $2.4 billion in cash and stock at the end of June.

JetBlue’s all-cash offer is valued at nearly $3.8 billion, including a $400 million reverse break-up fee.

Spirit, while it continues discussions with both Frontier and JetBlue, has repeatedly backed a merger with Frontier citing lower regulatory approval risk. The main concern is JetBlue’s unwillingness to offer to end its alliance with American Airlines in the northeast in exchange for antitrust approval. JetBlue has offered to divest all of Spirit’s assets in Boston and New York — the two markets covered by the American alliance — as well as gates at the Fort Lauderdale airport.

Spirit shareholders are scheduled to vote on the Frontier proposal on July 27.

Spirit Airlines has delayed — for a fourth time — a key shareholder vote on its proposed merger with Frontier Airlines, and by extension a hostile offer from JetBlue Airways.

The vote will now occur on July 27, nearly two-weeks later than the current July 15 date. Frontier CEO Barry Biffle asked Spirit to delay the vote on July 7, saying the airline’s offer was “very far” from shareholder approval.

In a letter to staff Wednesday, Spirit CEO Ted Christie acknowledged that the delay was in response to Frontier’s request. “There has been no change to our position at this time — the Spirit board has reiterated its commitment to the Frontier transaction and strongly recommends stockholders vote for the merger,” he said. Christie added that discussions continue with both Frontier and JetBlue.

JetBlue has wooed Spirit shareholders with its larger upfront cash offer for Spirit. The New York-based airline is offering a total of nearly $3.8 billion in cash for the carrier, whereas Frontier’s cash-and-stock offer totaled roughly $2.4 billion on June 27, according to a recent Raymond James analysis. Biffle, in his July 7 letter, said the airline does not intend to up its offer.

Frontier Airlines CEO Barry Biffle wants to make a deal for Spirit Airlines. But, in a letter sent to the CEO of Spirit Sunday, is concerned about the lack of support from both Spirit management and its shareholders.

“We still remain very far from obtaining approval from Spirit stockholders,” Biffle said in his letter to Spirit CEO Ted Christie and General Counsel and Secretary Thomas Canfield. He noted Spirit’s decision on July 7 to delay — again — a key shareholder vote on the Frontier deal by a week to July 15. Biffle requested an additional postponement of the vote to July 27.

Frontier, and its primary shareholder private equity firm Indigo Partners, does not intend to modify its latest offer that was made on June 24, Biffle added. The cash and stock deal is valued at roughly $2.4 billion, whereas JetBlue’s all-cash offer at nearly $3.8 billion, according to a Raymond James analysis.

“We also believe that the proxy solicitation process would unquestionably benefit from the board of directors of Spirit expressly reaffirming its recommendation of the pending merger with Frontier,” Biffle said. He asked that Spirit publicly back Frontier’s offer again within 10 days, or by July 20.

“Our proposed combination is not only pro-competitive — making it possible to bring ultra-low fares to more routes in competition with larger, high-cost, high-fare airlines — our offer delivers significantly greater value to Spirit stockholders,” Biffle reiterated in the letter.

Frontier and Spirit unveiled plans to merge in February, but the mutually agreed to deal was disrupted by an unsolicited bid from JetBlue Airways in April. The result has been a bidding war where, despite Spirit’s repeated support for the Frontier deal, JetBlue’s greater cash offer — regardless of regulatory approval risks — has repeatedly appeared to have the support from Spirit shareholders.

For all who hoped for some resolution to the months-long saga over the future of Spirit Airlines on June 30, no go. The carrier has postponed a shareholder vote on a merger with Frontier Airlines to July 8.

Spirit will immediately open and close the June 30 meeting with no vote in order for its board to “continue discussions” with both preferred suitor Frontier and hostile bidder JetBlue Airways, the Florida-based discounter said late Wednesday. This is the second time Spirit has delayed a shareholder vote, which was first scheduled for June 10.

Frontier is offering shareholders $4.13 plus 1.91 of its own shares for each Spirit share plus a $350 million reverse break-up fee, while JetBlue is offering at least $33.50 per share to up to $34.15 a share based on certain conditions and a $400 million break-up fee. All in, Frontier’s offer is worth $2.4 billion and JetBlue’s nearly $3.8 billion, according to an analysis by Raymond James.

The resulting airline from either a Spirit-Frontier or Spirit-JetBlue merger will be the fifth largest in the U.S. with a roughly 8 percent share of the market.

JetBlue Airways is not done yet trying to acquire Spirit Airlines. With just three days until shareholders vote, the New York-based carrier has upped its offer again, raising its reverse breakup fee to $400 million to beat rival bidder Frontier Airlines.

JetBlue’s latest offer — its fourth for Spirit — also includes a prepayment of $2.50 per share of the breakup fee, and a “ticking fee mechanism” where the airline would pay Spirit shareholders an additional $0.10 per share monthly from January 2023 until the deal closed, JetBlue said Monday. The ticking fee could increase JetBlue’s overall offer to as much as $34.15 per share. Its last offer was for $33.50 per share plus a $350 million breakup fee.

“We’ve discussed our offer directly with Spirit shareholders and are now modifying our proposal in response to shareholders’ expressed interest, to include a monthly payment for shareholders, with the certainty of a significant cash premium at closing,” JetBlue CEO Robin Hayes said Monday.

And, in a letter directly to Spirit shareholders, Hayes said the airline’s board has “never negotiated with us and have now favored a transaction that better serves Frontier’s controlling shareholder than Spirit’s shareholders.”

Frontier’s latest offer, unveiled on June 24, included an additional $2 per share for a total of $4.13 a share, plus a $350 million reverse break up fee. The offer was valued at $2.7 billion based on closing stock prices that day.

Spirit shareholders will vote to accept or reject Frontier’s offer on June 30.