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Spirit Airlines terminates merger agreement with Frontier

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Spirit Airlines and Frontier called off plans for their merger after months of negotiations.

Video Transcript

SEANA SMITH: And let's take a look at Spirit because Spirit moving on the news here, up just about 2%, ending its merger deal with Frontier, continuing talks with JetBlue. Both Frontier and JetBlue largely unchanged here after hours, but we are seeing the reaction in Spirit at least for now. Frontier declining to further raise its sweetened $2.7 billion bid for the airliner. This ends one of the most contentious battles within the airline industry in quite some time. And Dave, this is a story that we've been talking about, I feel like, for quite some time. And this shareholder vote was postponed four times before this afternoon's decision.

DAVE BRIGGS: Yeah, the push and the pull between the shareholders and the board is clearly evident and not over yet. I mean, it looks like a JetBlue deal. Their offer is significantly richer than that of Frontier. But there maybe is some bad news here for the consumer. It was thought, at least on the surface, if they merged with Frontier, that was a good story for the consumer. You might save on airfares. And they also claimed that they would create 10,000 jobs if that were the merger. I don't believe that's the case, according to analysts, if they, indeed, merge with JetBlue, if JetBlue can buy them, which looks likely.

Now there's a whole other side to this. Will the Biden administration approve this deal? Analysts say it was much less likely to get approved with the JetBlue option than the Frontier. And we've seen with the Biden administration, they are not in a hurry to approve mergers and deals of this size. Look at Microsoft and their purchase of Activision. We are still waiting. We have not heard a word on that deal being approved. So this is huge news for the airline industry. Either way, it will create the fifth largest airline in the country, significantly smaller, though, than the other four.

SEANA SMITH: Yeah, and I think when you're talking about approval and whether or not that will get the nod from the Biden administration, Rachelle, a lot of that's going to come down with what this will mean for the consumer, like what Dave was talking about, and how significantly this merger could potentially, if they do go with JetBlue and we do see a merger here of Spirit and JetBlue, what that would mean for the end user. And that would be us, paying for these airline tickets.

RACHELLE AKUFFO: I mean, and this was big, because obviously, we saw Spirit and Frontier started with these discussions back in February. And then of course, in April, here comes JetBlue with this all-cash offer that made things a whole lot more interesting, which is what ended up poisoning the discussions leading to these delays because it was very hard to ignore this offer. And then they started one-upping each other. So now we're at the point where, at least for Frontier, that's off the table.

So now we get to watch and see what JetBlue does next. If this hopefully results in perhaps some benefits for the consumer, obviously, that still remains to be seen. Still a far cry from the big three that still dominate the space, but it'll be interesting to watch. Hopefully, we'll actually see some sort of progress, and maybe we'll actually see a deal come through this year.

SEANA SMITH: Yeah, well, we can see. The Street, though, at least a little bit excited that they decided to scratch the deal with Frontier, with shares up just about 2% in afterhours.