In a webcast today, Spirit’s leadership discussed the decisions behind its board’s unanimous rejection of JetBlue’s tender offer, and reiterated its support for the merger with Frontier. Speaking to a call full of investors and journalists, CEO of Spirit, Ted Christie, outlined the issues with JetBlue’s offer. He said,

“At the heart of the board's decision is the fact that JetBlue’s offer is not reasonably capable of being consummated. JetBlue’s regulatory case is weak and defies common sense … I have to wonder if JetBlue is purposefully downplaying the substantial regulatory risk.”

Also at the heart of the concerns is JetBlue’s relationship with American Airlines. The DOJ is currently litigating the Northeast Alliance in court. Christie believes the regulatory concerns of a Spirit-JetBlue merger will make the deal, ultimately, impossible.

“It’s inconceivable to us that an acquisition of Spirit by JetBlue gets approved unless they abandon the NEA anti-competitive alliance with American Airlines. JetBlue has demonstrated that preserving this alliance with American and not its acquisition of Spirit is its first prize.”

JetBlue capitalized on the strong demand environment to deliver revenue growth and is entering the third quarter with strong momentum despite the high expenses. Photo: Vincenzo Pace | Simple Flying

A cynical attempt at disruption

Christie went on to label the JetBlue move to offer a deal with Spirit as, “a cynical attempt to disrupt our merger with Frontier because the Spirit-Frontier combination poses a competitive threat.”

The CEO spoke for 10 minutes, scathing in his commentary, accusing JetBlue of spreading misinformation about the board and its processes. Calling the New York airline ‘desperate to disrupt’, he assessed,

Certain airlines still have some work to do to reduce passenger complaints. Photo: Vincenzo Pace / Simple Flying

Wheeling out support

As if the harsh words of the CEO weren’t enough, Spirit brought along a friend. Andrew Finch is co-chair of the Antitrust Practice Group and a partner in the Litigation Department at top law firm Paul, Weiss. He outlined, from an antitrust point of view, what the issues are with the JetBlue offer. He said,

“From my time in the DOJ antitrust division, I can tell you that the facts do not support a favorable decision by regulators on a JetBlue-Spirit combination.”

Specifically, he said there would be eyebrows raised about the raising of ticket prices on the former Spirit routes. He also raised concern about the removal of some 50% of ULCC capacity in the US due to the elimination of Spirit, and further brought up the de facto merger in the northeast of JetBlue and American Airlines.

The assessment was nothing new, but designed to support Spirit’s claims that the JetBlue deal would never pass antitrust. The board were clearly keen to hammer their message home at any cost.

Photo: Vincenzo Pace | Simple Flying.

Campaigning for votes

While Spirit presented a united front, and Christie delivered an inspirationally rousing speech, you have to wonder if the board is not feeling just a little rattled. The emotion and urgency with which the CEO spoke almost sounded pleading at times, begging for the votes to swing the right way. He said,

“Our board continues to unanimously recommend that Spirit’s stockholders vote for the merger proposal with Frontier on June 10.

“We recommend Spirit stockholders reject the JetBlue tender offer and do not tender any shares of Spirit to the offer. We are excited about the Frontier combination and the opportunities it brings to our guests, our Spirit family and our stockholders.

“A vote for the Frontier merger is a vote to create America's most competitive Ultra Low Fare airline and to bring long term superior value to Spirit stockholders.”

Spirit’s shareholders are expected to vote on June 10th. The future of the airline is now in the hands of its investors, and Spirit’s board is clearly praying they’re more motivated by doing the right thing than making money.