- JetBlue Airways has placed a $3.6 billion unsolicited bid for low-cost giant Spirit Airlines.
- The news comes just months after Frontier and Spirit agreed to merge in a deal worth $6.6 billion.
- JetBlue says its bid is a "superior proposal" compared to Frontier's $2.9 billion offer.
Low-cost giants Frontier Airlines and Spirit Airlines announced a groundbreaking merge agreement in February, but JetBlue Airways just made a "superior proposal" for Spirit.
On Tuesday, JetBlue confirmed that it has placed a bid of about $3.6 billion to acquire Spirit, with "an adjusted enterprise value of $7.3 billion." The news may ruffle feathers with budget rival Frontier, which planned to purchase Spirit for $2.9 billion.
Frontier's acquisition of Spirit would be worth $6.6 billion.
JetBlue said in a press release that the acquisition would generate strong competition for the big four airlines — Delta, United, American, and Southwest — and trigger the "JetBlue Effect," which the company says occurs when the legacy carriers react to the merger.
"The combination of JetBlue and Spirit – coupled with the incredible benefits of our Northeast Alliance with American Airlines – would be a game-changer in our ability to deliver superior value on a national scale to customers, crewmembers, communities, and shareholders," JetBlue CEO Robin Hayes said. "The transaction would accelerate our strategic growth and create sustained, long-term value for the stakeholders in both companies."
Spirit also confirmed the news on Tuesday, calling the offer "unsolicited," but plans to "evaluate JetBlue's proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders."
Frontier defended its proposal in a statement to Insider, saying JetBlue's "high-fare" model would lead to higher ticket prices for travelers.
"In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit options for consumers," a Frontier spokesperson said. "It is surprising that JetBlue would consider such a merger at this time given that the Department of Justice is currently suing to block their pending alliance with American Airlines."
While JetBlue's offer is worth more than Frontier's, its business model does not mix as well with Spirit as would Frontier's, according to the New York Times. For example, both Frontier and Spirit are ultra-low-cost carriers that charge extra for additional amenities, like checked bags and inflight snacks.
However, JetBlue's model offers more premium amenities, like free WiFi, inflight entertainment, and complimentary drinks and snacks. Both JetBlue and Frontier do operate Airbus family planes, which would match Spirit's fleet.
Nevertheless, Hayes said low fares and a quality product can work hand-in-hand.
"Customers shouldn't have to choose between a low fare and a great experience, and JetBlue has shown it's possible to have both," he said.
If Spirit chooses Frontier, the combined carrier would become the fifth-largest airline in the US, and expand flight options with "more than 1,000 daily flights to over 145 destinations in 19 countries across complementary networks."
The approval of either merger is still up in the air. Some members of Congress, like Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, worry the combined carrier could impact customers by increasing fares and worsening customer service.