“It’s unlikely the D.O.J. or a court will likely be persuaded that JetBlue needs to be allowed to form an anticompetitive alliance that aligns its interest with a legacy carrier after which also undertake an acquisition that will eliminate the most important 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 might also pre-emptively divest from certain airports to handle 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 big premium in money — more certainty and more advantages 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 support. Last month, the Justice Department sent the 2 airlines “second requests” for details about their merger, a process that effectively ties up the deal until the businesses 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 mix two budget carriers with strengths on opposite coasts. JetBlue’s offer could speed up its plans to compete with the 4 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 greater than 10 percent.
JetBlue also accused Spirit’s management of being blinded to the advantages of its offer by their relationship with Frontier’s leadership. Indigo Partners, a personal equity firm that invests in budget airlines, owned a controlling interest in Spirit from 2006 to 2013, the identical yr it bought Frontier.