By DAVID KOENIG, AP Airlines Editor
Frontier Airlines on Friday added more money and higher breakage fees to its offer to buy Spirit Airlines, and Spirit’s board reiterated its preference for Frontier over a competing offer from JetBlue Airways.
Frontier added $2 per share to its previous offer, bringing it to $4.13 in cash plus 1.9126 Frontier shares for each Spirit share.
The Denver-based airline also increased the amount it would pay Spirit, based in Miramar, Fla., if antitrust regulators cut the deal — from $250 million to $350 million — as a breach fee. offered by JetBlue.
Spirit said that given the watered-down terms, its board reiterated its unanimous recommendation that shareholders approve Frontier’s offer at a special meeting next Thursday.
JetBlue said its proposition remains better than Frontier’s with higher value, more money, “more certainty and more regulatory protections.”
Frontier’s decision was the latest bet in a fight between Frontier and JetBlue to see who would get the nation’s biggest discount airline. On Monday, New York-based JetBlue raised its cash offer to $33.50 per share, or more than $3.6 billion.
At present value, JetBlue’s proposition is worth more. JetBlue is offering to buy all of Spirit’s stock and reconfigure the low-cost airline’s planes into JetBlue’s less cramped layout.
Frontier’s stock and cash offer would give Spirit shareholders 48.5% of the new combined airline – which has yet to be named. This means that investors willing to own the stock could gain if the stock price increases enough.
Spirit’s board cited another reason for favoring Frontier, which, like Spirit, is a very low-cost carrier that charges very low fares but also many additional fees. Spirit argued that antitrust regulators are very unlikely to let JetBlue buy Spirit and take its low fares out of the market.
JetBlue disputes Spirit’s finding. He bypassed Spirit’s board and appealed directly to Spirit shareholders to reject Frontier’s offer.
Frontier and JetBlue agree on one thing: Both say that buying Spirit would make it a stronger competitor to the country’s four major airlines, American, Delta, United and Southwest.
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