Spirit (NYSE:SAVE) on Monday rejected JetBlue’s (NASDAQ:JBLU) $3.6-billion all-cash offer and said it was sticking with a deal to merge with fellow ultra-low-cost carrier Frontier Airlines (NASDAQ:ULCC), an agreement struck in February valued at $2.9 billion. Spirit’s stock fell more than 9% Monday after it announced it was turning down the JetBlue offer in favor of the Frontier deal, while JetBlue’s rose slightly while JetBlue’s rose more than 2%.
Miramar, Florida-based Spirit cited regulatory concerns in turning down the offer, saying it doubted a JetBlue acquisition would get approved, in part because of JetBlue’s Northeast partnership with American Airlines, which the Justice Department sued to block last year. The DOJ argued in its suit that it would drive up fares and hurt competition, specifically mentioning the importance of smaller carriers like JetBlue.
Spirit’s rejection leaves JetBlue Airways at a turning point. Nearly 24 years after it was incorporated, JetBlue has grown from a quirky leisure airline based in New York City with one class of service into the sixth largest airline in the U.S. with more than 100 destinations from Los Angeles to Lima, Peru.
Throughout its more than two decades of service, JetBlue stood out among its peers, advertising low fares and passenger amenities like seatback screens, satellite television and later, free Wi-Fi. It even has more legroom than competitors. Its latest venture – service to London – aims to capture rivals’ high-paying passengers with its Mint business-class suites.
SAVE shares were grounded 78 cents, or 3.8%, to $19.91, while those for ULCC lost 45 cents, or 4.4%, to $9.73. As for JBLU, its shares fell 41 cents, or 3.7%, Friday to $10.55.
