As per as the DOJ, the series of agreements would result in the consolidation of the two airlines in New York and Boston, which the department said eliminated significant competition in those cities and reduced JetBlue’s incentive to compete with American elsewhere.

Recently a spirit airline said that they have rejected an offer to acquire JetBlue, saying the proposed transaction represents “an unacceptable level of closure risk” for its shareholders. The ultra-low-cost carrier insisted that the takeover offer does not constitute a superior offer issued by Frontier Airlines prior to the Spirit-Frontier 7 merger agreement.

On April 29, JetBlue revised its offer to increase its monetary value and promised to sell Spirit’s assets, which could present a conflict of interest with JetBlue’s Northeast Alliance agreement with American Airlines, but Spirit refused and declined the offer. Spirit said it will continue to move toward completing its merger with Frontier, which is expected to close in the second half of this year if it passes the antitrust investigation. Under the terms of the merger agreement, Spirit Equity holders will receive 1.9126 shares of Frontier and $2.13 in cash for each existing Spirit share.

DOJ

Under the terms of the merger agreement, Spirit Equity holders will receive 1.9126 shares of Frontier and $2.13 in cash for each existing Spirit share.

Tendered on April 5 JetBlue’s has offered $33 per share in cash, represents a premium of approximately 50 percent over Spirit’s stock price on April 4, and a higher monetary value than the cash and stock offering from Frontier. Still, that deal would have faced considerable antitrust scrutiny given JetBlue’s ongoing battle with the Department of Justice (DOJ), which sued the company last year for its Northeast Alliance (NEA) agreement with American Airlines. According to the DOJ, the series of agreements would result in the consolidation of the two airlines in New York and Boston, which the department said eliminated significant competition in those cities and reduced JetBlue’s incentive to compete with American elsewhere. JetBlue said in December that the NEA has allowed it to announce plans for nine new destinations and 32 new routes.

By the end of this year, JetBlue and American had added 63 new routes to their schedules, including 19 international flights to launch this year and increased frequency on more than 130 routes. According to the information, Spirit Airlines chairman Mac Gardner and CEO Edward M. Christie wrote in a letter to JetBlue CEO Robin Hayes that, “We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue’s Northeast Alliance (NEA) with American Airlines remains in existence. [The Department of Justice] clearly views the NEA as having a broader national effect and Spirit believes DOJ will not place great weight on your proposed remedy, especially because there are reasons to doubt the efficacy of similar divestitures as a remedy in past airline mergers.”

Airlines

JetBlue said in December that the NEA has allowed it to announce plans for nine new destinations and 32 new routes.

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