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JetBlue sweetens offer for Spirit Airlines ahead of vote on Frontier bid

Yahoo Finance Live’s Brian Sozzi breaks down JetBlue’s proposal for acquisition of Spirit Airlines.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: Welcome back. All eyes on the not-so-friendly skies. JetBlue answering Frontier's enhanced proposal with one of its own offering a $400 million reverse breakup fee up from its previous $350 million offer. JetBlue's proposal also offers a $2.50 per share dividend rising from its earlier offer of $1.50 a share. Now, Frontier CEO Barry Biffle told us that a tie up with Spirit will be better for the consumer. Here's what he had to say.

BARRY BIFFLE: We're both low cost carriers that provide real competition. And so by combining, it enables us to lower fares even further, and it provides the ability to have more low fares to more people in more places. And so at a time when we're seeing just record prices of everything we buy, I think keeping airfares very low is really important. And I think when you compare and contrast that to the JetBlue option, you're talking about a family of four shelling out another $400 for airfares if that was to go through.

BRIAN SOZZI: As we know it, of course, this vote on this deal is supposed to happen later this week. June 30th to be exact. But you mentioned this a little bit yesterday with Barry. He wasn't necessarily wanting to get into the mudslinging, but I'm surprised by the rhetoric and the tone by JetBlue CEO, Robin Hayes here. They put out a letter yesterday-- extensive letter. And he's saying that Spirit shareholders are essentially being misled by the folks at Frontier. Just rhetoric you don't normally hear in a public battle like this. But surprise me.

- Well, you wonder if that's going to sway shareholders?

BRIAN SOZZI: It doesn't seem to be working at this point.

- No, it doesn't. But you know, I guess we'll see with the vote on Thursday. But it's interesting because frequently in these situations, the highest price wins. And so this is a bit unusual that we are not seeing that kind of scenario.

BRIAN SOZZI: Well, it comes back to regulation.

- Right. And I think shareholders want the deal that's most likely to make it fully through and pass regulatory sniff tests at the end of the day too. And the combinations from what we've heard from both JetBlue and what we heard directly from Frontier yesterday in our conversation with Barry Biffle, what this would do in terms of the routes and particularly on the side of this broader air carrier business that they will operate, which is on the low cost, easy travel kind of option for consumers.

And I think for consumers who are looking at any type of navigation of their own finances, they're looking for lower fares, this is where it makes sense for Frontier or for JetBlue. But I think it's still more likely that we see a Frontier deal actually go through, especially considering the fact that Spirit has continually pushed back against any offer from JetBlue.

BRIAN SOZZI: It's not often you see a company, to your point, just take a lower price deal. But again, you have that regulatory overhang and it's unclear even if-- Spirit's shareholders vote to approve the Frontier deal if the deal will get approved by government officials.

- Yes. I'll be happy when this is done.

BRIAN SOZZI: Can they just fix the seats on Spirit? Can they just fix the seats?

- No.

BRIAN SOZZI: It would require fixing the-- don't get me started on that, please.

- That would require--

- You need to fix the aircrafts.

BRIAN SOZZI: I want to get you started.

- No, no, no. That would require paying money.

BRIAN SOZZI: Paying money.

- Them paying money. No, no. I mean, it's a low cost airline. They're not going to invest in the seats.

- It's an aircraft problem itself too. The seats are terrible. They are bidding on Spirit.

BRIAN SOZZI: I got both of you going. This is great.

- That has a-- I'm just saying, and I don't need to go down the net promoter score tirade anymore, but it is an experience that I think passengers have spoken for themselves and continuously said, I don't really love the experience. But if it's going to get me from point A to point B and I only have to pray--

- At a lower cost.

- --at a lower cost, and I only have to pray three times-- when I'm taking off, landing, and somewhere when you hit turbulence-- then I guess I can pay that fare.

- I mean, you know, there's obviously, lots of examples of you get what you pay for across the consumer landscape . I think with low cost flying it is almost more true than anywhere.

BRIAN SOZZI: Shout out Delta and CEO Ed Bastian. I mean, their seats are great. They have little pods in them.

- They do, yeah.

- Again, you get what you pay. You're going to pay a premium when you're flying.

- I deserve first class.

- Sure you do.

- We all deserve.

- We all deserve first class.