Tag Archives: Frontier Group Holdings Inc

How JetBlue’s takeover of Spirit could change air travel

Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport.

Paul Hennessy | LightRocket | Getty Images

Spirit Airlines relented this week and agreed to sell itself to JetBlue Airways for $3.8 billion, hours after breaking off a merger agreement with Frontier Airlines that failed to win enough shareholder support.

The new deal would mean big changes for travelers if it passes regulatory hurdles.

JetBlue has earned a reputation for passenger comforts like relatively generous legroom, seatback screens, live television, free Wi-Fi, and complimentary snacks like Cheez-Its and Stellar vegan butter pretzel braids. It also offers business class, with lie-flat seats.

Spirit, by contrast, has become a punchline for its bare-bones service. The cabins in its bright yellow planes are more cramped, and passengers have to pay extra for “optional services” like carry-on luggage and getting to pick a seat.

“It’s historic. This is the first time anyone wanted Spirit Airlines,” quipped “The Late Show” host Stephen Colbert about the deal on Thursday.

Still, Spirit has expanded rapidly and profitably by offering cheap tickets to vacation hotspots that can sometimes run less than a trip to the movies or a few burgers. The airline’s “Big Front Seat,” however, does offer 36 inches of legroom for a surcharge of up to $250.

As the two distinct airlines push ahead with their plans to combine, here’s what passengers can expect:

What are JetBlue’s plans for Spirit?

JetBlue wants to get bigger, and Spirit has the planes and pilots to help it do that. The New York-based carrier plans to retrofit Spirit’s planes in JetBlue’s style, ripping out the packed-in seats for a roomier layout with more amenities.

Combined, the airlines would become the country’s fifth-largest carrier, behind American, Delta, United and Southwest. Both have a big presence in Florida and each has expanded into Central and South America as well as the Caribbean in recent years. JetBlue last year started flying to London.

The two carriers will continue to operate as separate airlines until after the deal closes, which is subject to regulatory approval. Afterward, passengers might be confused if they’re flying in Spirit planes that haven’t been retrofitted yet.

JetBlue has some experience with such situations through its alliance with American in the Northeast, which allows the carriers to sell seats on each others’ planes. Last year, JetBlue revamped its website to better highlight the differences in onboard features like business class seats or free Wi-Fi.

Despite comedians’ digs, Spirit has improved its reliability in recent years — and is faring better than JetBlue by some measures.

JetBlue came in last among 10 airlines in on-time arrivals this year through May, while Spirit ranked seventh, according to the Transportation Department’s latest available data.

So far this year, a third of JetBlue’s flights were delayed and 4% have been canceled, according to flight tracker FlightAware. By comparison, slightly more than a quarter of Spirit’s flights have arrived late and 2.7% have been canceled.

JetBlue’s CEO Robin Hayes says improving reliability is a priority. The carrier has scaled back growth plans, saying it did not want to overextend its crews and other resources.

“A bigger JetBlue that is late is not a better JetBlue,” said Henry Harteveldt, a former airline executive and founder of Atmosphere Research Group, a travel-industry consulting firm.

Is this the end of cheap fares?

The Biden administration has vowed to take a tough stance on both consolidation and inflation, so the disappearance of an ultra low-cost airline could be a tough sell.

“Spirit might not be an elegant experience, but they are cheap,” said William Kovacic, a professor at the George Washington School of Law and a former chair of the Federal Trade Commission. “If they disappear as an independent enterprise … is that going to remove a source of downward pressure on price?”

But JetBlue’s Hayes says the airline needs to grow quickly and better compete with big airlines that control more than three-quarters of the U.S. market. Hayes argues a bigger JetBlue would mean more relatively lower fares to more destinations.

Like some of the airline giants, JetBlue has already added certain low fares that mimic carriers like Spirit. Those tickets also don’t come with seat assignments or other perks that were once standard with a coach fare.

But JetBlue’s business model of offering more comforts costs more than Spirit’s, meaning it likely won’t offer as many of the rock bottom fares that Spirit does.

Frontier Airlines, meanwhile, is already saying it’s happy to take on a bigger share of the ultra-low-cost market after its Spirit deal fell apart. Shortly after the airlines announced the end of their agreement, Frontier projected it would grow 30% next year and started a fare sale with 1 million seats going for $19 apiece.

The airline will become the largest discount carrier in the U.S. if Spirit is ultimately acquired. Others include Allegiant and Sun Country.

“That just gives us a huge amount of breathing room for growth,” said Frontier CEO Barry Biffle. “That’s why this is such a windfall for our employees and our shareholders.”

When is this happening?

Not immediately. JetBlue and Spirit expect the deal won’t get regulatory approval until late 2023 or early 2024, then close in the first half of 2024.

Integrating airlines is a lengthy and costly process. For example, United and Continental flight attendants didn’t even fly together until eight years after those airlines merged in 2010.

Retrofitting planes can take years too, and JetBlue wouldn’t be able to start that process with Spirit’s fleet until at least 2025. But the airline notes it recently outfitted more than 100 of its Airbus planes with new interiors.

“We’ve got a lot of recent experience in how to do it,” said Hayes.

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JetBlue agrees to buy Spirit in $3.8 billion deal to create 5th-largest U.S. airline

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.

Leslie Josephs | CNBC

JetBlue Airways reached a deal to buy Spirit Airlines, hours after the discount carrier scrapped plans to merge with Frontier Airlines.

JetBlue said it will pay $33.50 a share in cash for Spirit in a $3.8 billion deal.

A JetBlue acquisition of Spirit would create the country’s fifth-largest carrier, and if approved by regulators, would leave Frontier as the largest discount carrier in the U.S.

JetBlue’s surprise, all-cash bid for Spirit in April had thrown Spirit’s plan to combine with fellow discounter Frontier into question. For months, Frontier and JetBlue competed for Spirit, each sweetening their offers, until the original merger plan fell apart earlier Wednesday, clearing the way for JetBlue.

Spirit said it planned to continue talks to sell itself to JetBlue after ending the Frontier agreement.

JetBlue executives have argued for months that buying Miramar, Florida-based Spirit would help it compete with large carriers like American, Delta, United and Southwest, which control most of the U.S. market, and fast-track its growth by giving it access to more Airbus jetliners and pilots, both of which are in short supply.

New York-based JetBlue wants to refurbish Spirit’s planes in JetBlue style, featuring seatback screens and more legroom.

Spirit previously rebuffed JetBlue’s bids and said such a deal wasn’t likely to be approved by regulators, in part because JetBlue’s alliance with American, which the Justice Department sued to block last year.

The deal faces a high hurdle for regulatory approval.

Spirit shares were up more than 4% in premarket trading after the deal was announced, while JetBlue was up 0.5%.

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Spirit again delays vote on Frontier deal to continue deal talks with budget airline and JetBlue

A Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Spirit Airlines is again delaying a shareholder vote set for Friday on its deal to merge with Frontier Airlines, a win for competing suitor JetBlue Airways, which wants to buy Spirit outright.

It is the third time Spirit has postponed the vote, which was originally scheduled for June 10. It was later pushed to June 28, but Spirit had delayed it until July 8 last week, a day before the vote.

Spirit said Thursday it would now hold the vote on July 15 so it could continue deal talks with both airlines.

The delays bode well for JetBlue Airways, which swooped in with a $3.6 billion all-cash offer to buy Spirit in April. Two months earlier, Frontier and Spirit announced a $2.9 billion cash-and-stock deal to combine into a discount behemoth.

“We are encouraged by our discussions with Spirit and are hopeful they now recognize that Spirit shareholders have indicated their clear, overwhelming preference for an agreement with JetBlue,” JetBlue’s CEO Robin Hayes said in a statement after the latest delay.

Spirit’s board repeatedly rejected JetBlue’s offers, including sweetened proposals, arguing it didn’t think regulators would sign off on the deal. JetBlue said both deals would face regulatory scrutiny, and Hayes said that Spirit’s board didn’t give JetBlue’s offers full consideration.

It wasn’t clear if Spirit would have the shareholder support it needed to get the Frontier deal passed ahead of the last scheduled meeting, according to a person familiar with the matter.

Frontier, which also sweetened its offer for Spirit, nearly doubling the cash portion to $4.13 a share, didn’t immediately comment on the latest vote delay.

Spirit shares were up 2% in afterhours trading, while Frontier shares were down less than 1%. JetBlue was little changed.

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Frontier offers $250M reverse breakup fee if Spirit merger is blocked

A Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Frontier Airlines’ parent company on Thursday said it would pay a $250 million reverse breakup fee to Spirit Airlines if regulators don’t approve the planned combination of the two discount carriers for antitrust reasons, an effort aimed at convincing investors to approve the deal next week as rival JetBlue Airways tries to buy Spirit outright.

“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” Mac Gardner, Spirit’s chairman said in a news release.

New York-based JetBlue offered $33 a share, or $3.6 billion cash for Spirit, in April, above the $2.9 billion cash-and-stock deal that Spirit and Frontier announced in February.

Spirit’s board rejected JetBlue’s advances, and JetBlue last month made a tender offer of $30 a share and has urged Spirit shareholders to vote against the deal.

Spirit said a deal with JetBlue wouldn’t likely be approved by regulators. JetBlue’s offer includes a $200 million reverse breakup fee if regulators don’t approve the acquisition.

On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns about the lack of a reverse termination fee.

Spirit’s shareholder meeting is set for June 10.

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JetBlue launches hostile takeover bid for Spirit Airlines

JetBlue Airways on Monday commenced a hostile all-cash takeover bid for Spirit Airlines, two weeks after the discount carrier rejected an offer from the larger rival.

JetBlue, which in early April offered $33 per share, is locked in a takeover battle for Spirit with Frontier Group Holdings and has argued a deal will help better compete with the “Big Four” U.S. airlines that control nearly 80% of the passenger market.

In a letter to Spirit shareholders on Monday, JetBlue offered $30 per share and said it was ready to “negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence.”

Spirit rejected the earlier offer, saying it had a low likelihood of winning approval from regulators.

JetBlue said on Monday it had filed a “Vote No” proxy statement urging Spirit shareholders to vote against the planned merger with Frontier, which cash and stock for each share of the discount carrier that was valued on Friday at $18.81 a share.

Shares of Spirit rose more than 17% to $19.90 in premarket trading. JetBlue shares were down 1.5%

Frontier and Spirit did not immediately respond to Reuters requests for comment.

Spirit will hold a shareholder meeting on June 10 to vote on its proposed merger with Frontier.

JetBlue said Monday that on March 29 its Chief Executive Robin Hayes called Spirit Chief Executive Edward Christie to inform him of the airline’s interest in buying Spirit and said in a letter “the combination of our two companies would create a leading player best positioned to serve our customers by offering increased flight schedules and more competitive fares.”

JetBlue, the sixth largest U.S. passenger carrier, would operate Spirit under the JetBlue brand and does not think any divestitures are needed, but promised a $200 million reverse break-up fee, or $1.80 per Spirit share, if the deal did not go through for antitrust reasons.

Spirit in April had sought a significantly higher reverse break-up fee, JetBlue said.

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Biogen, Spirit, Robinhood and more

Check out the companies making headlines before the bell:

Biogen (BIIB) – Biogen fell 1% in premarket trading after the government announced that Medicare will limit coverage for Aduhelm, Biogen’s Alzheimer’s disease treatment. Coverage will only be provided for patients enrolled in clinical trials.

Spirit Airlines (SAVE) – Spirit said it will begin talks with JetBlue (JBLU) about its rival’s $3.6 billion takeover bid. Spirit had agreed earlier this year to be taken over by Frontier Airlines parent Frontier Group (ULCC) but said the JetBlue offer could lead to a “superior proposal.” Spirit rose 1.4% in premarket trading, while JetBlue added 1% and Frontier jumped 2.5%.

Robinhood Markets (HOOD) – The financial services and stock trading platform operator’s stock slid 4.1% premarket after Goldman Sachs downgraded it to “sell” from “neutral.” Goldman believes consensus estimates for Robinhood are too high and it sees a high bar for the company to achieve profitability in 2023.

WD-40 (WDFC) – WD-40 surged 9.5% in the premarket following better-than-expected quarterly earnings and revenue. The lubricant maker earned $1.41 per share for the quarter, 40 cents above estimates, although it cut its full-year guidance slightly due to inflationary challenges.

Designer Brands (DBI) – The footwear and accessories retailer raised its full-year earnings outlook and reinstated its quarterly dividend after a two-year pause. The upbeat forecast comes ahead of the company’s annual investor day. Designer Brands stock jumped 4.6% in the premarket.

Kroger (KR) – The supermarket operator’s stock added 2.6% in premarket action after Bank of America Securities upgraded it to “buy” from “neutral.” BofA said elevated food inflation will be among several upside earnings drivers.

CrowdStrike (CRWD) – CrowdStrike rallied 3.7% in premarket action after the cloud computing company received authorization to protect critical assets of the U.S. Department of Defense.

Workday (WDAY) – The finance and human resources software company struck a new $1 billion credit agreement with lenders, replacing a prior credit pact.

PriceSmart (PSMT) – PriceSmart beat estimates by 3 cents with a quarterly profit of $1.03 per share and the discount retailer’s revenue was slightly above Wall Street forecasts. Merchandise sales were above $1 billion for the first time ever and membership levels also set a record.

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5 things to know before the stock market opens Wednesday, April 6

Here are the most important news, trends and analysis that investors need to start their trading day:

1. Stock futures sink in what would add to Tuesday’s drop on Fed worries

Traders on the floor of the NYSE, March 31, 2022.

Source: NYSE

U.S. stock futures dropped Wednesday as investors await more insight into what appears to be a Federal Reserve shifting to an even more aggressive monetary policy tightening path. Minutes from the Fed’s March meeting, which featured the first interest rate hike in more than three years, are out at 2 p.m. ET. The market sees at least 0.25% rate increases at all six of the remaining Fed meetings of the year, with bigger 0.5% rises possible in May and June. Fed Governor Lael Brainard, who normally favors loose policy and low rates, said Tuesday the central bank needs to act quickly and aggressively to drive down inflation. Those comments sent Wall Street lower and bond yields to near three-year highs again.

2. Bond yield rise, pushing up mortgage rates, driving down home loan demand

In fact, 30-year fixed-rate mortgages topped 5% on Tuesday. The rising rate environment sent total home loan application volume down another 6% last week, according to the Mortgage Bankers Association. That’s down 41% from the same week a year ago.

3. Oil CEOs, Yellen to testify at separate hearings on Russia-Ukraine war

Oil prices remained elevated Wednesday on supply concerns as the U.S. and its European allies consider more sanctions against Moscow as allegations emerge about wartime atrocities by Russian troops in Ukraine. The head of the European Council said Russia oil and gas sanctions needed sooner or later. Higher crude prices have, in turn, pushed gasoline prices higher. The CEOs of oil companies, including Chevron and Exxon, are set to testify Wednesday before a House panel about what they’re doing to control energy costs. At another House hearing, Treasury Secretary Janet Yellen is set to talk about the global impact of Russia’s invasion of Ukraine on the global economy.

4. JetBlue tops Frontier with $3.6 billion all-cash offer for Spirit Airlines

A Spirit Airlines plane on the tarmac at the Fort Lauderdale-Hollywood International Airport on February 07, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

JetBlue Airways made an unsolicited $3.6 billion all-cash offer for Spirit Airlines, raising questions about Spirit’s deal to combine with rival discount carrier Frontier Airlines. Spirit said its board was evaluating JetBlue’s proposal, which is 33% higher than Frontier’s stock-and-cash offer. Trading in Spirit shares was halted before Tuesday’s market close after the stock spiked more than 22%. Spirit’s shares were lower in Wednesday’s premarket. Frontier was also lower in the premarket.

5. Musk spent $2.64 billion on Twitter shares so far this year, filing shows

Elon Musk talks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan.

Rebecca Cook | Reuters

Tesla CEO Elon Musk has been buying Twitter shares on almost a daily basis since the end of January, spending $2.64 billion for his current stake in the company, according to a regulatory filing Tuesday. The disclosure came in a 13D, which confirms Musk’s intentions to be more active in Twitter’s business. He was announced as a new board member earlier Tuesday. Twitter also confirmed it’s testing an edit button, which was the subject of a Musk Twitter poll Monday, hours after a filing revealed he had acquired an over 9% stake in the social network.

— CNBC reporters Jeff Cox, Diana Olick, Leslie Josephs, Lora Kolodny and Jordan Novet as well as The Associated Press and Reuters contributed to this report.

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Twitter, Spirit Airlines, Tilray and more

Check out the companies making headlines before the bell:

Twitter (TWTR) – Twitter fell 1.5% in premarket trading, potentially breaking a three-day win streak that has seen it gain nearly 32%. Elon Musk – now Twitter’s largest shareholder – changed the type of SEC filing regarding his share purchase to show it was not “passive.”

Spirit Airlines (SAVE) – Spirit said its board will consider a new $3.6 billion cash takeover offer from JetBlue (JBLU). Spirit had agreed in February to be bought by Frontier Airlines parent Frontier Group (ULCC) for $2.9 billion in cash and stock. Spirit slid 2.8% in the premarket, with JetBlue dropping 3.7% and Frontier falling 3.9%.

Tilray (TLRY) – Tilray rose 2.1% in the premarket after reporting an unexpected profit for its latest quarter, even as revenue fell below analyst estimates. The cannabis producer also announced a deal with supermarket chain Whole Foods, which will sell the hemp powders produced by Tilray’s Manitoba Harvest subsidiary.

Rivian (RIVN) – Rivian shares gained 1.7% in the premarket after the company said it was on pace to achieve its previously stated production target of 25,000 electric vehicles this year.

Occidental Petroleum (OXY) – The energy producer’s shares added 1.7% in premarket action after Stifel Financial began coverage with a “buy” rating. Stifel said Occidental remains attractively priced even after it nearly doubled so far this year, noting a largely underappreciated low carbon business.

Intel (INTC) – Intel announced it suspended business operations in Russia, following last month’s suspension of semiconductor shipments to customers in Russia and Belarus. Intel fell 1.1% in premarket trading.

Gogo (GOGO) – Gogo surged 10.4% in premarket trading after the aviation industry broadband provider announced its stock would join the S&P SmallCap 600 index prior to Friday’s open.

Array Technologies (ARRY) – Array Technologies rallied 14.5% in the premarket after the renewal energy equipment maker reported better-than-expected quarterly revenue and issued an upbeat revenue outlook. It also named Kevin Hostetler as its new CEO, effective April 18, replacing the retiring Jim Fusaro.

Simply Good Foods (SMPL) – The maker of nutritional foods and snacks reported better-than-expected profit and revenue for its latest quarter and raised its sales forecast for the current year.

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Spirit Airlines shares spike 20% after report says JetBlue made bid

Spirit Airlines planes on the tarmac at the Fort Lauderdale-Hollywood International Airport on February 07, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Shares of Spirit Airlines surged more than 22% on Tuesday after a report that JetBlue Airways has made a bid for the budget carrier, raising questions about Spirit’s deal to combine with rival discount carrier Frontier Airlines.

Spirit confirmed after the market closed on Tuesday that JetBlue had made an unsolicited offer.

JetBlue’s bid, reported earlier by The New York Times, comes less than two months after Spirit and Frontier agreed merge into a discount airline behemoth.

Spirit said its board was evaluating JetBlue’s proposal and will “pursue the course of action it determines to be in the best interests of Spirit and its stockholders.”

The competition for Spirit shows renewed appetite for consolidation in the airline industry as it digs its way out of two difficult pandemic years that hurt travel demand. Carriers are now scrambling to hire to meet a rebound in travel.

A wave of consolidation that began more than a decade ago left four major airlines in control of more than 70% of the U.S. market.

Trading in Spirit was halted before the market closed. Its shares were at $26.93. JetBlue offered $33 a share in its all-cash bid, according to Spirit.

JetBlue and Frontier didn’t immediately comment to CNBC.

JetBlue shares closed down about 7%.

Spirit and Frontier both solely fly planes in the Airbus A320 family. Those make up the majority of JetBlue’s fleet, which would reduce costs and logistical headaches in combining the carriers.

However, JetBlue has a partnership with American Airlines that allows the carriers to coordinate service in the Northeast U.S. The two airlines said the agreement would give them a better chance to compete against United and Delta Air Lines in crowded airports in New York and Boston.

The Justice Department sued to block that partnership last year.

American declined to comment on JetBlue’s offer for Spirit.

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Spirit Airlines, Peloton, Snowflake, Netflix and more

A Spirit Airlines aircraft takes off at Orlando International Airport.

Paul Hennessy | SOPA Images | LightRocket | Getty Images

Check out the companies making headlines in midday trading.

Frontier Group, Spirit Airlines — Shares of Frontier Group and Spirit Airlines rose in midday trading after the companies announced they are merging in a deal valued at $6.6 billion. The two largest low-cost airlines will create what would become the fifth-largest airline in the country. Spirit Airlines surged 14% and Frontier Group was marginally higher.

Peloton — Shares of the exercise bike maker soared 15% after reports that Amazon and Nike expressed interest in buying the company. The reports come a few days after activist investor Blackwells Capital urged Peloton’s board to consider a sale of the company. Still, CNBC reported that all talks are preliminary, and Peloton has yet to kick off a formal sales process.

Hasbro — Hasbro shares fell 0.7% even after the toymaker beat Wall Street estimates for its latest quarterly report. Hasbro posted per-share earnings of $1.21, well above the 88 cents a share Refinitiv consensus estimate.

Stock picks and investing trends from CNBC Pro:

Tyson Foods — Shares of Tyson jumped 10% after a better-than-expected earnings report. The beef and poultry producer reported earnings of $2.87 per share, beating earnings estimates. Higher meat prices helped boost profit.

Ford — Ford shares dipped 1% after announcing Friday it will suspend or cut production at eight of its North American factories due to the global semiconductor shortage.

Spotify — Spotify was on watch again after a compilation video of the company’s biggest podcasting star Joe Rogan using a racial slur circulated on social media. CEO Daniel Ek apologized to Spotify employees for the controversy with Rogan. Shares fell 1.9%.

Snowflake — Shares of Snowflake jumped 6.5% after Morgan Stanley upgraded the data storage stock to overweight from equal weight. The firm said Snowflake is undervalued after the stock’s roughly 30% fall from its high and has quality growth.

Netflix — The streaming stock fell 3.7% after Needham analyst Laura Martin reiterated an underperform rating on the stock. She said Netflix must consider drastic measures to “win the ‘streaming wars,'” such as adding a cheaper ad-supported tier and even selling itself.

Stanley Black & Decker – Shares of the tool manufacturer fell 3.2% after Citi double-downgraded the stock to sell. “We downgrade SWK to Sell (from Buy) due to recent margin dilutive acquisitions, potential m/s loss, and lack of new innovative products,” Citi said.

— CNBC’s Yun Li, Maggie Fitzgerald and Tanaya Macheel contributed reporting

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