The Spirit Airlines and Frontier Airlines merger is over. Spirit Airlines shareholders have rejected the bid to merge with Frontier, opening the door to a possible Spirit-JetBlue deal.

No deal

On Wednesday, Spirit Airlines announced that it has terminated the merger agreement with Frontier Group Holdings, the parent company of Frontier. The announcement came hours before the Spirit Airlines shareholders were set to bid on the proposal from Frontier, a vote that the carrier has been delaying as it sought to appeal to shareholders to support the merger.

During the last few months, JetBlue has been fiercely bidding to acquire Spirit, confident that it could swing the votes of Spirit’s shareholders away from the Frontier offer. Now it seems the door is wide open for JetBlue to step in, a move that could create the fifth-largest carrier in the United States.

Ted Christie, President and CEO of Spirit Airlines, said,

“While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our Team Members on the transaction over the past many months. Moving forward, the Spirit Board of Directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders."

There has been no update on the vote as yet, or whether the voting process even went ahead.

Frontier 'disappointed' but puts a positive spin on the situation

Frontier Airlines is clearly not delighted with the news, but is endeavoring to put a positive spin on the situation. In a release that arrived moments after Spirit's announcement, the carrier sought to highlight its strong foundation and positive attributes as a standalone carrier.

Bill Franke, chair of Frontier's board and the managing partner of majority shareholder Indigo Partners, commented in a statement,

“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier Board took a disciplined approach throughout the course of its negotiations with Spirit. We were focused on offering the appropriate value for Spirit, while prioritizing consumers and the best interests of Frontier, our employees and shareholders. As we enter our next chapter, Frontier remains well-positioned to deliver significant value to our shareholders as we serve the growing demand for affordable air travel.”

The airline highlighted its rapid growth in the leisure segment, and its strong position of having low overheads and ultra-low unit costs. It notes that it is delivering the lowest fares to its customers, announcing plans to sell one million passenger seats from $19. CEO Barry Biffle commented,

“As we continue to see a rebound in leisure travel, we have never been more confident in our strategy and prospects than we are today,”

Frontier intends to announce its second quarter financial results after market close today.

JetBlue's offer

UPDATE: 2022/07/27 23:37 EST BY JOANNA BAILEY

JetBlue statement on the cancelation of the Spirit-Frontier deal

JetBlue provided the following statement regarding today's announcements:

"We are pleased that the merger agreement with Frontier has been terminated and we are engaged in ongoing discussions with Spirit toward a consensual agreement as soon as possible. We remain fully committed to completing this transaction so we can create a compelling national challenger to the dominant airlines with more opportunities for all."

Previously, Spirit had repeatedly delayed the vote; it was looking to persuade its shareholders to support this deal. Spirit’s management was actively trying to move away from the JetBlue offer.

According to Spirit’s management, the “unsolicited tender offer from JetBlue” is not in the best interests of the airline and its stockholders. Instead, it faces “substantial regulatory hurdles, especially while the Northeast Alliance with American Airlines remains in effect.”

Nonetheless, ending the Frontier-Spirit merger doesn’t mean JetBlue’s offer will be accepted. According to JetBlue, its proposal to acquire Spirit would position JetBlue “as the most compelling national low-fare challenger to the Big Four airlines.” Together, the airlines would control 10.2% of the market, behind United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines.

JetBlue has offered around US$3.7 billion to acquire Spirit, and plans to refurbish Spirit’s planes in JetBlue style, featuring seatback screens and legroom. At this point, it is possible that no deal gets done, and the three airlines remain independent.