Spirit Airlines has walked away from its merger negotiations with Frontier Airlines as it continues negotiations over a possible deal with rival JetBlue.
It comes one month after Spirit knocked back JetBlue’s last offer of $34.15 per share, stating the offer was too low, along with concerns over gaining regulatory approval.
The three budget airlines had been involved in an acquisition ‘love triangle’ for months as JetBlue and Frontier both sought to create America’s fifth-largest airline that could challenge the country’s legacy carriers.
“While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past many months,” said Ted Christie, president and chief executive of Spirit Airlines.
“Moving forward, the Spirit board of directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders.”
The move is unsurprising after Spirit failed to gain the support of its shareholders for the merger with Frontier. The shareholder vote on the matter, due to take place on Wednesday, was previously postponed four times due to low support for the deal.
Meanwhile, JetBlue has continuously urged shareholders not to approve the Frontier merger, and said on Wednesday it was pleased to hear the deal was not going ahead. A spokesperson said JetBlue would continue to work with Spirit “toward a consensual agreement as soon as possible.”
William Franke, chair of Frontier’s board, said “While we are disappointed that Spirit Airlines shareholders failed to recognise the value and consumer potential inherent in our proposed combination, the Frontier Board took a disciplined approach throughout the course of its negotiations with Spirit.”
Meanwhile, concerns remain around Spirit’s ability to get regulatory approval for a deal with JetBlue — which would see JetBlue acquire the airline and its fleet entirely — due to JetBlue’s existing alliance with American Airlines.
It comes as Frontier reported a $13 million profit in the second quarter. The airline also saw a record $909 million in revenue, an increase of 43 per cent on the same quarter in 2019.
Frontier said profits were subdued somewhat due to higher operating costs in the current environment, however it expects to again generate a record profit in the third quarter.
Spirit and JetBlue are yet to report second quarter financial results.