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Spirit postpones Frontier deal vote, to continue talks with Frontier and JetBlue

·2 min read

By Anirban Sen and Svea Herbst-Bayliss

(Reuters) - Spirit Airlines Inc said it has postponed a shareholder vote scheduled for Friday on its $2.4 billion sale to Frontier Group Holdings Inc so its board can continue discussions with both Frontier and JetBlue Airways.

Reuters first reported the planned delay.

Over the past few months, JetBlue and Frontier, led by influential airline investor Bill Franke, have repeatedly sweentened their bids for Spirit, seeking to create the fifth largest U.S. airline.

The Spirit shareholder vote, which has been delayed twice before, is being pushed back for a third time to give Spirit and JetBlue time to finalize a deal, sources told Reuters, requesting anonymity as the discussions are confidential.

Spirit said it now plans to hold a special meeting on July 15.

JetBlue CEO Robin Hayes said in a statement the airline was "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 submitted a sweetened $3.7 billion all-cash bid last month but Spirit has been reluctant to accept JetBlue's much more financially attractive offer due to concerns that antitrust regulators may reject it, according to the sources.

JetBlue is already facing a lawsuit from the U.S. Justice Department over its partnership with American Airlines in the New York and Boston areas.

There is no certainty JetBlue will provide Spirit the necessary assurances on the regulatory front to reach a deal and Frontier, which has already improved its offer, may come back with a new bid, the sources added.

The Frontier deal is also expected to face antitrust scrutiny. But Spirit and some analysts say that deal has a better chance of getting a nod from regulators.

Both bidders view Spirit as an opportunity to expand their domestic footprints and reshape the U.S. airline industry, which is largely dominated by four domestic carriers. An acquisition by either bidder would come at a time when the industry is currently grappling with labor and aircraft shortages.

Last week, Spirit was forced to postpone the shareholder vote until July 8. The sources said it did not have enough shareholders to back the Frontier deal at the time.

(Reporting by Anirban Sen and Svea Herbst-Bayliss in New York and David Shepardson in Washington; additional reporting by Rajesh Kumar Singh; Editing by Greg Roumeliotis, Bill Berkrot and Edwina Gibbs)