Spirit Airlines late this afternoon announced it has terminated its merger agreement with Frontier Airlines, leaving open the possibility that the low-budget carrier could still cut a deal with its other suitor, JetBlue Airways.
Spirit shareholders rejected the Frontier bid in a stockholder vote at the company's Miramar, Florida headquarters. Spirit and Frontier had agreed in principle to merge in February; less than six weeks later, JetBlue came in with an offer, then went for a hostile takeover bid.
Spirit's management and Board of Directors - wary of gaining regulatory approval with the Department of Justice's lawsuit pending against JetBlue and its Northeast Alliance with American Airlines - preferred the stability of an agreement with Frontier. But JetBlue raised its offer three times during negotiations, apparently wowing shareholders with a bid that was $1 billion more than what Frontier offered.
"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, President and CEO of Spirit Airlines, 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."
"While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier Board took a disciplined approach throughout the course of its negotiations with Spirit," William Franke, chair of Frontier's board and managing partner of Indigo Partners, Frontier's majority shareholder said in a release.
It certainly wasn't for a lack of trying, particularly on Spirit's end. Spirit delayed its shareholder vote four times in six weeks, trying to secure enough votes among stockholders to ensure a successful outcome for Frontier.
In the end, the votes weren't there.
Previously, Frontier had resigned itself to the fact that it could not match JetBlue's far superior financial offer of almost $1 billion more, saying earlier this month it would not make another bid. Frontier CEO Barry Biffle said in a July 15 letter that his airline simply did not have the support of Spirit shareholders.
"We still remain very far from obtaining approval from Spirit stockholders based on the proxy data we received as of July 8," Biffle wrote to Spirit CEO Ted Christie and General Counsel Thomas Canfield.
A potential Spirit-JetBlue alliance would create the nation's fifth-largest airline behind American, Delta, United and Southwest.
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