Not So Fast! JetBlue Starts Bidding War for Spirit Airlines
The future of air travel from Atlantic City International Airport was linked to the nation's big economic story on Tuesday when JetBlue Airways made an offer to buy Spirit Airlines for about $3.6 billion.
JetBlue's intention is to break up a plan for Spirit to merge with rival budget carrier Frontier Airlines.
Spirit said Tuesday that its board will evaluate the JetBlue bid and decide what's best for its shareholders.
According to Philadelphia Business Journal, JetBlue offered $33 per share in cash, which would be about 40% higher than Frontier would pay for Spirit under terms of a .
Frontier's offer in cash and stock was worth $2.9 billion when it was announced, but Frontier shares have fallen since then, reducing the value to Spirit shareholders.
Tuesday was an excellent day to have stock in Spirit Airlines. Shares of Atlantic City International Airport's lone carrier Spirit soared 22% after The New York Times first reported the JetBlue bid Tuesday, closing at $26.91 a share.
A Frontier-Spirit tie-up would combine Frontier's route map in the western United States with Spirit's network along the East Coast and the Caribbean. Both are discount airlines that offer rock-bottom fares and make up some of the difference by charging extra for many things that bigger airlines include in the ticket price, including carry-on bags and soft drinks.
Another factor is JetBlue's size. JetBlue is not the same kind of ultra-low-cost carrier.
Frontier and Spirit are small enough that their deal might not get close scrutiny from antitrust regulators. Those same regulators already weighed in last year tobetween JetBlue and American Airlines, arguing that such a deal would raise fares for passengers.