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Which Way, Spirit Shareholder?

Vote on Merger Leaves Spirit Execs in the Lurch, Unsure of Merger Status

The Spirit and Frontier Airlines merger stands before shareholders of the company, scheduled to vote on the matter today on whether or not the two should approve the airline as a preferred buyer. 

Rumor has it that Spirit’s board leans a different way than the shareholder body, preferring to merge with Frontier. The shareholders, however, just might reject the bid and push it into the arms of JetBlue Airways, whose $3.7 billion all-cash offer handily outstrips Frontier’s $2.6 billion offer. Naturally, money is only a portion of the deal, as the board and Frontier argue that a JetBlue bid has little chance of making its way past antitrust regulators. A changing economic landscape and an administration positioning itself as ‘tough’ on companies make a JetBlue deal a bit of a longshot to some, especially in light of the current suit aiming to break up the airline’s deal with American Airlines.

So what of the Frontier/Spirit arrangement? For one, the board finds it the most enticing, judging from a recent appeal from Spirit CEO Ted Christie. The deal, they hope shareholders understand, would create a bigger, stronger airline with the combined resources and network of a couple of the biggest ultra low-cost carriers in the game. The new planes would allow a plethora of new routes and add more than 10,000 new jobs by 2026, if the adspeak is to be believed. All in all, much remains to be seen, from the shareholder’s selection to whether or not uncle sam will allow such a deal to go through. Theoretically, the Frontier deal could be more likely, given the size of both carriers and limited reach of their networks, aspects which JetBlue lacks in comparison. If the apparently unlikely selection of Frontier comes from the shareholder vote, then it could ultimately touch off a series of similar mergers among similarly sized low-cost carriers. 

FMI: www.spirit.com, www.jetblue.com


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