JetBlue Highlights Third-Party Recognition of Superiority of JetBlue Transaction
JetBlue (NASDAQ: JBLU) asserts that its acquisition proposal for Spirit (NYSE: SAVE) is vastly superior to Frontier's (NASDAQ: ULCC) offer, emphasizing all-cash benefits, higher upfront value, and a commitment to customer competition against major airlines. JetBlue's strategy promotes lower fares and enhanced experiences for travelers, alongside greater job opportunities for employees. Analysts support JetBlue's bid while expressing skepticism about Spirit's financial projections under Frontier. JetBlue calls for Spirit shareholders to reject the Frontier deal and back its proposal.
- JetBlue's all-cash offer promises higher upfront value and more certainty for Spirit shareholders.
- Analyst consensus favors JetBlue's proposal over Frontier, citing superior financial benefits.
- The merger is expected to enhance competition against major airlines, potentially lowering fares for consumers.
- Increased career opportunities for Spirit and JetBlue employees post-merger.
- Spirit's Board has been criticized for rejecting JetBlue's proposals without proper consideration.
- Concerns raised over Spirit's financial projections under Frontier, indicating potential shareholder value loss.
Third-party analysts and airline industry experts have consistently recognized that JetBlue’s proposal to acquire
Decisively superior value for shareholders
Despite Spirit’s wildly optimistic and unrealistic claims about share price years down the road,
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“The big deal here is that
JetBlue has come in all-cash, they’ve come in with breakage fees, and if you take the Frontier offer, you basically are waiting for synergies for a combined company, a couple years out... From a financial standpoint, it’s really hard to defend.” –George Ferguson , Bloomberg Intelligence (Bloomberg,June 27 andJune 21, 2022 )
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"[JetBlue’s] improved offer should make it easier for SAVE [management] and shareholders to buy into the financial superiority of JBLU's offer." –
Daniel McKenzie (Seaport,June 22, 2022 )
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“Things look less rosy for Frontier... Its mostly-stock bid also looks worse amid falling stock markets... Based on that math,
Spirit shareholders should reject the Frontier bid when they vote on June 30.” –Jonathan Guilford (Reuters Breakingviews,June 15, 2022 )
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“Spirit Airlines says the combination of
Spirit and Frontier will make their shares worth each in the future. The only way that could happen is... inflation. But if the claim were true then Spirit’s board should be demanding more than$50 per share to sell!” –$25 Gary Leff (View from the Wing,June 29, 2022 )
Confidence in obtaining regulatory approval
Independent regulatory experts as well as sell-side analysts have assessed the facts beyond Spirit’s smokescreen claims and recognize that both the
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“I would think that
Spirit and Frontier merging is a bigger antitrust concern thanSpirit andJetBlue merging. That’s because, whileJetBlue is a low-cost carrier, it’s not necessarily an ultra-low-cost carrier like bothSpirit and Frontier. So I'd say that there’s a lower risk of the JetBlue-Spirit acquisition being blocked.” –Florian Ederer , associate professor of economics,Yale School of Management (Forbes,June 6, 2022 )
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“We do ascribe a reasonably high probability of regulatory passage to either of the two deals that are on the table right now.” –
Jamie Baker , JP Morgan (CNBC Power Lunch,May 17, 2022 )
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“If you’re an investor and you think both transactions are unlikely to get approved by the DOJ, go with the bid that will pay you a ticking fee… and has a higher offer. Once you are in court anything can happen.” –
Aaron Glick , Director and Analyst for Options & Events atCowen and Company (CNBC Squawk Box,June 29, 2022 )
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“Savanthi Syth, an airline analyst for
Raymond James & Associates , said any loss of cheap seats after a JetBlue-Spirit deal will be temporary because other budget carriers — notably including Frontier — will grow. ‘Frontier has the order book (for new planes) to step in and pick up whatSpirit leaves behind,’ she said.” –Associated Press (June 29, 2022 )
By comparison, Spirit’s
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“Now look, I am not a lawyer – I have counsel but didn’t speak to them about this – but I just know enough.” –
Jim Cramer (CNBC Mad Money,June 28, 2022 )
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“Both the [
JetBlue ] lawyers and the advisors are simply oblivious to what this man [Jonathan Kanter ] wants. Which I am not because I’m aPaul Weiss client.” –Jim Cramer (CNBC Mad Money,June 28, 2022 )
Spirit’s Board has run a flawed process from start to finish
For months, the
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“We firmly believe that if, as shareholders, we must wait for a transaction to be consummated following a lengthy regulatory process, we are much better off waiting alongside
JetBlue , which is willing to compensate us along the way. The Board’s self-serving actions and failure to accept JetBlue’s per share offer is preventing shareholders from receiving superior value.” –$33.50 TIG Advisors ,Spirit top ten shareholder (Letter toSpirit Board,June 28, 2022 )
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“If you’re the
Board of Spirit , and you don’t engage and you leave not only the but the$30 sweetener on there – call the lawyers.” –$33 Brian Sullivan (CNBC Squawk Box,May 16, 2022 )
Customers are bigger winners with a combined JetBlue-
Industry observers recognize that a bigger
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“Bare-bones carrier Frontier argues it can spread more low-fare competition with
Spirit . While this might seem logical, the reality is that big carriers have increasingly found ways to ignore cheaper competitors because they know most of their customers won’t fly them … It’s different withJetBlue . Because the airline offers credible coach service (that’s perhaps even better than service on “Big Four” carriers), larger airlines can’t as easily ignoreJetBlue in head-to-head competition.” –Scott McCartney , former Senior Writer and "Middle Seat" columnist at theWall Street Journal (The Points Guy,June 9, 2022 )
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“It’s not all about catering to people who want to pay
or$29 fares. There are passenger segments that$59 JetBlue will serve that Frontier andSpirit do not. There are going to be lots of seats out there, and it’s not likeJetBlue will stop offering low fares.” –Michael Linenberg , Deutsche Bank (Associated Press ,June 29, 2022 )
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“[JetBlue’s] point was if we acquire
Spirit , they actually have the same type of planes, we’re going to make their planes nicer by adding in theJetBlue experience, and this will actually keep airfares lower. And I actually kind of agree with this ... People who fly Delta/United/American don’t look at Frontier orSpirit as options … So whatJetBlue is saying is that it will actually benefit airfare because if we take over andJetBlue becomes bigger, we’re actually a competitor where people will fly JetBlue.” –Brian Kelly , The Points Guy (The Morning Toast,May 25, 2022 )
Greater benefits for pilots and crewmembers
Team members of both
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“Clearly, the airline wants to be more than just a domestic airline. So a combined
JetBlue andSpirit would be appealing to pilots who want to work for a growing airline in the future." –Henry Harteveldt , President ofAtmosphere Research (Reuters,April 7, 2022 )
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“I just wanted to let you know the vast majority of
Spirit pilots are rooting for you. Everyone I talk to has tendered their shares toJetBlue . We believe in you andJetBlue . Please don’t give up the fight to get the shareholders on board. We will makeJetBlue the best airline in the US.” – A seniorSpirit pilot (Email toJetBlue CEORobin Hayes ,June 26, 2022 )
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“JetBlue and
Spirit discussed Spirit’s financial projections ... focusing on Spirit’s unrealistic assumptions, especially with respect to costs associated with personnel attrition and wage inflation, which did not contemplate any wage increases for team members, including pilots, at a time of high attrition and an anticipated shortage of pilots. I am deeply troubled by this information as it appears that eitherSpirit is not being transparent with its shareholders, or it is not contemplating any wage increases for pilots as part of its financial projections. ... My pilots deserve answers.” – CaptainRyan P. Muller ,Spirit Airline Pilots Association (ALPA) (Open letter toSpirit CEOTed Christie ,May 18, 2022 )
We strongly encourage all
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