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JetBlue raises its bid to acquire Spirit Airlines

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Yahoo Finance Live anchors discuss the bidding war for Spirit Airlines.

Video Transcript

- Also here, speaking of buying, let's talk about the bidding war for Spirit Airlines. That's heating up, as JetBlue raises its offer for Spirit to $33.50 per share. That is up from what was $30 previously. And they just were looking for more negotiation opportunity at the end of the day. But again, we've talked about this time and time again. I don't think I need to go on my tirade about Spirit's net promoter score anymore, because we already know what it is. And it's not good.

So for JetBlue here raising their offer here, $33.50 a share in cash, they're also looking for some commitments, some data commitments, and really trying to get further under the hood or into the engine of the Spirit operation. And that's what they're looking for as a broader kind of push to actually offer this $33.50 per share. And so we'll see exactly where that data may come forward. They're also looking for some improved proposals, including the previous commitment of $350 million in a reverse breakup fee, and then an accelerated prepayment of $1.50 a share, as well.

- So we still don't know who's going to win this.

- We don't.

- It's very interesting here. There were some fun details in a story on Bloomberg about the behind the scenes for this. Apparently, the Spirit-Frontier tie-up was codenamed Project Top Gun-- very of the moment right now to call it that-- and that the folks at JetBlue were really caught off-guard by the announcement of that merger, which was fully agreed upon. It wasn't that they were talks. It was fully agreed upon. And that merger agreement still stands, by the way, despite JetBlue pushing and pushing and pushing--

- Right.

- --in terms of its offer price. So we still don't know what's going to happen. We know that JetBlue really wants the routes, really wants the capacity that Spirit has to offer, but we don't know who's going to win it.

And I mentioned earlier-- now I've reminded myself of the correct acronym-- the International Air Transport Association, IATA, that I mentioned earlier said that the airline industry should return to profitable times next year. So we're not only seeing JetBlue and company on the rise today, we're seeing a pretty broad rally amidst the airline stocks.

- And it's good that we have a look at these airline stocks, especially coming off of a weekend like we did, and just stepping away from the JetBlue Maverick type of move to try and see if they can take over Spirit Airlines here, in the Top Gun theme. But for the airlines over the course of this weekend, we saw massive cancelations, the delays. Everybody-- if you talked to anybody who was traveling this weekend, they probably told you about one of their own grim experiences.

This has even gotten the attention of the Transportation Secretary, Pete Buttigieg, who has, in recent days and weeks, placed more pressure on airlines to be able to operate at a higher service level. But again, the big question for them is, do they have the necessary operating staff, the headcount, and the number of pilots, even, to ensure that they can go along the routes at a reduced capacity that they're already at, as well, at this point in time.

- Well, a lot of people are opting to drive, apparently, because AAA just out with its forecast for the Independence Day weekend, and they say 47.9 million people are going to travel 50 miles or more from their home over that holiday weekend. It's up 3.7% from last year, almost back to 2019. But they say car travel is going to set a record.