Thursday's Market Minute: Who To Choose, Frontier Or JetBlue?

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JetBlue Airways JBLU made an offer to buy Spirit Airlines SAVE for $3.6 Billion in cash, or $33 per share. News of the JetBlue offer caused Spirit shares to soar 22% on Tuesday, resulting in a stock trading halt on its shares. 

JetBlue claims their offer is a superior proposal over Frontier Airline’s merger deal with Spirit Airlines, coming in about 33% higher than Frontier’s cash and stock offer back in February. Frontier Chairman Bill Franke says the deal between Frontier and Spirit will “create America’s most competitive ultra-low fare airline for the benefit of consumers.” JetBlue’s CEO, Robin Hayes, says their deal would make JetBlue a stronger competitor to the four major U.S. carriers that service nearly 80% of passenger travel. He is looking to gain market share in key areas such as Florida and hub airports including Atlanta, Detroit, Miami, and Chicago. JetBlue is the currently the sixth largest U.S. passenger carrier. 

Spirit’s board is evaluating the offer and says it will pursue the best course of action for Spirit and its stockholders.

JetBlue shares were down over 8% Wednesday on the news, with Raymond James’ analyst Savanthi Syth already downgrading her rating on JetBlue to Market Perform from Outperform and removing her $18.50 price target. Shares of Spirit ended the day down more than 2% on Wednesday.

Will Frontier challenge their competitor with a new offer? That remains to be seen.

Image sourced from Unsplash

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.