“It’s unlikely the D.O.J. or a court will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interest with a legacy carrier and then also undertake an acquisition that would eliminate the largest U.L.C.C. carrier,” Spirit’s chief executive, Ted Christie, said to investor analysts on a call this month, referring to his airline’s standing as an ultra-low-cost carrier.
JetBlue disagreed with that conclusion and said it would also pre-emptively divest from certain airports to address regulatory concerns. Frontier has not agreed to similar concessions, nor has it offered to pay a breakup fee if the merger falls through over antitrust concerns. JetBlue would pay Spirit $200 million if a deal failed for that reason.
“JetBlue offers more value — a significant premium in cash — more certainty and more benefits for all stakeholders,” Jetblue’s chief executive, Robin Hayes, said in a letter to Spirit shareholders on Monday. “Frontier offers less value, more risk, no divestiture commitments and no reverse breakup fee.”
The proposed merger between Spirit and Frontier has also spurred concerns. In March, several progressive lawmakers, including Senators Elizabeth Warren, Democrat of Massachusetts, and Bernie Sanders, independent of Vermont, expressed misgivings, warning that the merger could raise ticket prices and harm customer service. Last month, the Justice Department sent the two airlines “second requests” for information about their merger, a process that effectively ties up the deal until the companies answer the agency’s long list of questions.
JetBlue said Monday that Frontier and Spirit overlap on 104 nonstop routes, twice as many as are shared between JetBlue and Spirit.
A Spirit-Frontier merger would combine two budget carriers with strengths on opposite coasts. JetBlue’s offer could accelerate its plans to compete with the four big U.S. carriers — American Airlines, Delta Air Lines, United Airlines and Southwest Airlines — which have a combined 66 percent share of the domestic market. A combined Frontier and Spirit would control over 8 percent of the market; JetBlue and Spirit together would command more than 10 percent.
JetBlue also accused Spirit’s management of being blinded to the benefits of its offer by their relationship with Frontier’s leadership. Indigo Partners, a private equity firm that invests in budget airlines, owned a controlling interest in Spirit from 2006 to 2013, the same year it bought Frontier.