Value-priced airlines Spirit (SAVEQ) and Frontier (ULCC -3.72%) were recently set to combine forces until JetBlue (JBLU -3.57%) came in with a higher offer for Spirit. In this Motley Fool Live segment from "Ask Us Anything," recorded on April 11, Fool.com contributor Lou Whiteman shares his thoughts on the potential airline merger.
Lou Whiteman: JetBlue is jumping in here. They intend to take the company and just make it a bigger version of JetBlue. They are not going to keep the Spirit model at all. What you are seeing here, there's a lot of pinch on this, both in terms of jet availability, and big thing is flight crews, pilots. Both the Spirit/Frontier deal and now this JetBlue offer, this is a way to grow capacity that you might not be able to. Obviously the JetBlue price is higher, so it should be the better offer, but this is going to be a really tough sell with regulators. So we'll see whether or not Spirit's board ultimately decides it's a better offer just because of the uncertainty. We got into it a lot last week.
But if you're a JetBlue shareholder, just watch carefully what's going on here. This is not an obvious fit. They're paying a lot. It sort of screams of desperation. It's not uncommon to see an acquirer's stock price fall, but JetBlue's shares were down something on the order of 20 percent last week. I think there's that old expression when someone tells you who they are, believe them. I believe in the corporate version of that. JetBlue trying to go hostile and break up a deal for company that's a bad fit, that overlaps them on route networks, kind of speaks to what JetBlue is looking at, their vision of how they would grow organically and what their other options are. Yes, it's an interesting time. It's a great time to be a Spirit shareholder, but we'll see how it turns out.
