JetBlue raises bid for Spirit Airlines ahead of shareholder vote

JetBlue Airways again upped its bid for Spirit Airlines with a shareholder vote for the discounter’s merger with Frontier Airlines just days away.

Frontier sweetened its offer on Friday. Spirit CEO Ted Christie told CNBC at the time that Spirit’s board of directors still felt the deal with budget airline Frontier was a better option than JetBlue.

Spirit shareholders to vote Thursday on Frontier’s cash-and-stock deal; Spirit postponed the vote earlier this month to continue deal talks with both airlines.

Both combinations would create the fifth largest US airline. The heated bidding war underscores how both JetBlue and Frontier view Spirit as key to their future growth plans at a time when planes and pilots are in short supply.

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.

Leslie Josephs | CNBC

Spirit had argued that it didn’t think a JetBlue deal would stand up with regulators, particularly given its alliance with American Airlines in the Northeast.

“Following the Spirit board’s failure to recognize our decidedly superior offer, we have discussed our offer directly with Spirit shareholders and are now amending our proposal in response to shareholders’ expressed interest to include a monthly payment to shareholders, with the Certainty, a significant cash reward at closing,” JetBlue CEO Robin Hayes said in a statement.

JetBlue’s new offering increases its reverse breakup fee to $400 million from $350 million if regulators don’t approve the deal, and includes a $2.50 dividend to Spirit shareholders per share, up from a previous offer of $1.50.

It also includes a “ticking fee” that would pay shareholders 10 cents per share each month beginning in January 2023 until the transaction closes or is terminated.

Spirit shares are up 5% in after-hours trading on the news, while JetBlues is up less than 1% and Frontiers is up 1%. Spirit and Frontier shares fell sharply in regular trading.

Frontier on Friday increased the cash portion of its offer by $2 a share to $4.13 and raised its reverse breakup fee proposal to $350 million, matching JetBlue’s earlier offer.

“We believe we have the most compelling offer for shareholders,” Frontier CEO Barry Biffle said in an interview on Monday. Biffle was speaking from New York, where he plans to meet with Spirit shareholders this week ahead of Thursday’s vote.

Frontier and Spirit didn’t immediately comment on the revised JetBlue offering.