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JetBlue CEO ‘optimistic’ airline can acquire Spirit -Breaking


© Reuters. FILEPHOTO: JetBlue Airways airplanes at New York’s John F. Kennedy International Airport June 15, 2013, are shown. REUTERS/Fred Prouser/File Photos

Rajesh Kumar Singh & David Shepardson

CHICAGO/WASHINGTON – Robin Hayes, Chief Executive of JetBlue Airways (NASDAQ) Corp said that he was “optimistic” that a deal can be reached to acquire the airline. Spirit Airlines (NYSE:) Inc.

Hayes said in an interview late Friday that “we’re happy that now there seems to be a genuine want from the Spirit board for engagement with us.” “We are going to keep engaging with the Spirit Board over the next few days.”

JetBlue and Frontier Group Holdings Inc are in a bidding fight for Spirit, a Florida-based ultralow-cost carrier. Spirit repeatedly rejected JetBlue’s offer and stated that it is unlikely to be approved by U.S regulators.

Spirit delayed the shareholder vote on Frontier’s merger to June 30 instead of June 10, according to Hayes. Hayes indicated that he believed the majority Spirit shareholders would prefer JetBlue’s offer and said “that’s how they had to delay their vote.”

JPMorgan (NYSE ) reported Thursday in its analyst report that JetBlue has considered a purchase of Spirit.

Both the bidders see Spirit as a chance to grow their domestic reach at a moment when America’s airline industry has been plagued by lack of labor and aircraft shortages. The fifth-largest U.S. carrier would be created by either of the deals.

JetBlue has increased the reverse breakup fee for Spirit from $150m to $350m, sweetening their offer to Spirit. The proposal now stands at $3.4 billion. New York-based JetBlue has agreed to pay a part of the fees upfront if Spirit shareholders approve.

Frontier agreed to pay Spirit $250 million in breakup fees, but it declined to increase its offer of $21.10 per share in stock and cash at Friday’s close price as a response to JetBlue’s revised offer.

Hayes claimed that the revised offers demonstrate “the value of the competitive process (Spirit board) should have followed in the beginning.” These events could have occurred months ago, despite what they have been.

Spirit is not happy with JetBlue’s partnership with American Airlines (“Northeast Alliance”) (NASDAQ:).

JetBlue and American were sued by the Justice Department in an attempt to restructure their partnership. Spirit asked JetBlue to end the partnership, but JetBlue refused.

JPMorgan indicated that JetBlue is open to trading the NEA partnership with Spirit for a merger.

According to the note, mergers can be transformative by design.