JetBlue CEO 'Optimistic' Airline Can Acquire Spirit
JetBlue Airways Corp Chief Executive Robin Hayes said Friday he is "optimistic" he can reach a deal to acquire Spirit Airlines Inc.
"We're pleased that there now seems to be a genuine desire from the Spirit board to engage with us," Hayes told Reuters late Friday in an interview. "We're going to continue to engage with the Spirit board over the next few weeks."
Florida-based ultra-low-cost carrier Spirit is the subject of a bidding war between JetBlue and Frontier Group Holdings Inc. Spirit has repeatedly rejected JetBlue's offer, saying it has a low likelihood of winning approval from U.S. regulators.
Spirit postponed a shareholder vote on its merger with Frontier to June 30 from June 10. Hayes said he thinks the majority of Spirit shareholders believe JetBlue's offer is superior and "that's why they had to delay the vote."
JPMorgan said in an analyst report 'Thursday that a deal by JetBlue to buy Spirit has become a "growing probability."
Both bidders view Spirit as an opportunity to expand their domestic footprints at a time when the U.S. airline industry is dogged by persistent labor and aircraft shortages. Either of the two deals would create the fifth-largest U.S. airline.
JetBlue has sweetened its offer for Spirit by increasing its reverse break-up fee by $150 million to $350 million, raising the overall value of its proposed deal to $3.4 billion. The New York-based airline has offered to pay a portion of the fee upfront after Spirit shareholders approve the deal.
Frontier has agreed to pay Spirit a break-up fee of $250 million but declined to raise its bid of $21.10 a share in cash and stock at Friday's closing price in response to JetBlue's revised offer.
Hayes said the revised offers illustrate "the benefit of the competitive process that the (Spirit) board should have run in the first place. Things that have happened in the last two weeks could have happened months ago."
JetBlue's "Northeast Alliance" (NEA) partnership with American Airlines is a sticking point with Spirit.
The Justice Department sued JetBlue and American to unwind the partnership. Spirit has asked JetBlue to drop the partnership if it wants a deal, but JetBlue declined.
JPMorgan said JetBlue would be willing to trade away the NEA partnership for a Spirit merger.
"Mergers are transformational by design," the note said.
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