Testimony in the current antitrust trial in Boston over plans for JetBlue to acquire Spirit Airlines has revealed a lot of detail about the maneuvering of the two airlines, which has been opposed by federal regulators.
Spirit’s CEO, Ted Christie, told the court that while Spirit had initially opposed JetBlue’s offer, preferring a merger with fellow ultra-low-cost carrier Frontier, the opposition was based on a fear that the deal would never win government approval, at least in part because JetBlue was already in its Northeast Alliance with American Airlines.
Christie detailed negotiations and changing offers from JetBlue that included a “come hell or high water” clause, guaranteeing that JetBlue would do anything necessary to get approval for the Spirit deal, including if necessary abandoning the Northeast Alliance or giving up slots and routes as needed.
JetBlue’s offer won favor with Sprit’s shareholders because it offered significantly more cash than Frontier’s. Spirit and Frontier had been talking merger for several years before last year’s announcement of a merger which ended up not happening because of the JetBlue bid.
That merger would have created an ULCC that would have been the #5 U.S. airline, up against the four that control about 80% of the business. If the merger with JetBlue is approved, it will have a similar effect, but with JetBlue instead of Frontier.
