A monthslong effort by Frontier Airlines to acquire Spirit Airlines abruptly ended on Wednesday when the companies called off their proposal, giving life to a rival bid for Spirit by JetBlue Airways.
The announcement came shortly before Spirit was to announce the results of a shareholder vote on Frontier’s acquisition offer. Spirit had repeatedly delayed the vote as it sought to persuade shareholders to support the deal and ignore the allure of the more valuable JetBlue offer.
“While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past many months,” Ted Christie, Spirit’s chief executive, said in a statement. “Moving forward, the Spirit board of directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders.”
Frontier said it was disappointed that Spirit’s shareholders had not rallied behind the deal. The airline, which has aggressively expanded since going public last year, said it was poised for growth.
A Frontier-Spirit merger would have created a national budget carrier. The two airlines complement each other, sharing a low-cost business model with different geographical strengths.
Spirit’s executives previously questioned JetBlue’s intentions, suggesting its offer may have been intended only to spoil the combination with Frontier. Spirit also said antitrust regulators would probably stand in the way of a JetBlue merger, though experts said either deal would be subject to intense federal scrutiny.
The decision by Frontier and Spirit doesn’t mean JetBlue’s offer will be accepted. It isn’t clear whether a majority of Spirit’s shareholders would support JetBlue’s latest offer. And even if they did, regulators could derail the combination or demand stiff concessions that the airlines would be unwilling to make.
The Justice Department is already suing JetBlue and American Airlines to prevent a partnership between those airlines at airports in Boston and New York, with a trial scheduled for early this fall.
Acquiring Spirit would accelerate JetBlue’s expansion plans and create the nation’s fifth-largest airline. Together, the airlines would control 10.2 percent of the market, still behind the nation’s four dominant carriers. United Airlines, the fourth-largest airline, has a 13.9 percent market share.
Frontier reported quarterly financial results around the same time that its Spirit deal was called off. The airline reported a $13 million profit on $909 million in revenue in the three months that ended in June. That was a 65 percent improvement in revenue and a 32 percent drop in profits from a year earlier.