by Michelle Chapman
Spirit Airlines is advising shareholders three days after it declined a tender offer for shares of JetBlue to become hostile in its bid to make it the nation’s fifth-largest airline.
Spirit reiterated Thursday that any attempt to merge with the New York carrier would face considerable regulatory hurdles, largely because of JetBlue’s alliance with American Airlines in the Northeast. The Justice Department is suing to block that deal.
JetBlue “is in the midst of a merger with American Airlines, one of the big three with which they are set to compete, and then trying to buy a competitor and take seats out of the market and raise fares and It’s going to be a big issue. And one that our board saw as insurmountable,” CEO Edward Christie told CNBC.
JetBlue responded on Thursday, saying that Spirit’s potential deal with Frontier also faces regulatory scrutiny.
“Both deals are subject to regulatory review, and both deals have a similar risk profile,” the company said in a statement. “Spirit shareholders recognize this and are showing great interest in hearing more about our superior proposition and the regulatory commitments and protections we make, including reverse break-up fees.”
JetBlue offered to buy Spirit Airlines following a proposed acquisition of that carrier by Frontier Airlines, a deal that continues to support Spirit despite its low offer price.
On Monday JetBlue launched a hostile takeover bid for Spirit, directly asking the low-cost carrier’s shareholders to vote for an alliance with Frontier Group Holdings Inc. of Colorado.
Monday’s offer from JetBlue was for $30 per share, or more than $3.2 billion in cash, but said an April 5 offer of $33 per share is still available if Spirit enters talks.
Spirits’ board on May 2 rejected JetBlue’s original bid for $3.6 billion.
Shareholders of Spirit, based in Miramar, Florida, are due to vote on June 10 on Frontier’s cash-and-stock offering, which was valued at about $2.9 billion when it was announced in February.
Shares of Spirit were down 2.6% before the market opened, while shares of JetBlue were down slightly.