Frontier to Spirit stockholders: Do not be fooled by JetBlue

Frontier Group Holdings, Inc., parent company of Frontier Airlines, Inc., today issued the following letter to Spirit Airlines’ stockholders regarding Frontier’s proposed merger with Spirit.

The full letter follows:

June 27, 2022

Dear Spirit Stockholders,

We continue to be excited about the Spirit-Frontier combination, which will create a true nationwide ultra-low-fare airline. The strategic rationale of a combined Spirit and Frontier remains sound, and the changes we have made to our merger agreement provide greater value for all Spirit stockholders – value that is well in excess of JetBlue’s illusory proposal, which lacks any realistic likelihood of obtaining regulatory approval.

You have an important decision to make about the future of your investment in Spirit Airlines at the upcoming Special Meeting on June 30, 2022. Before you vote, we want you to hear directly from Frontier why our combination deserves your support:

• Our combination gives Spirit stockholders the opportunity to realize significant upside in excess of $50 per share, delivering superior value compared to JetBlue’s proposal. The Frontier-Spirit transaction delivers significantly greater value to Spirit stockholders compared to the opportunistic cash offer from JetBlue, which creates a hard cap on value at $33.50 per share. With our updated agreement, we are raising the cash consideration for Spirit stockholders, bringing the total cash consideration to approximately $450 million. In addition to the added cash consideration, Spirit stockholders will benefit from the upside of the pandemic recovery and share in approximately $500 million in estimated annual net merger synergies. The math is clear – even with modest growth assumptions based on current recovery trends – the Frontier-Spirit transaction can easily provide proforma value in excess of $50 per Spirit share, value that is far superior to what JetBlue offers.

• Leading proxy advisory firms support Frontier and Spirit transaction. ISS and Glass Lewis recognize the value of the Frontier-Spirit combination and have recommended that Spirit stockholders vote to approve the transaction at the upcoming Spirit Special Meeting of Stockholders on June 30, 2022. Both ISS’s and Glass Lewis’s recommendations further validate our belief in the benefits inherent in our transaction and that the Frontier-Spirit transaction is the only compelling and viable offer on the table for Spirit and its stockholders.

• We have increased the reverse termination fee to $350 million, matching JetBlue’s proposal and providing a portion in accelerated prepayment. Not only will Spirit stockholders have the opportunity to participate in the upside potential of the Spirit-Frontier combination, but the amended merger agreement will also provide an accelerated prepayment of $2.22 per Spirit share in cash (approximately $241.1 million) of the reverse termination fee, structured as a cash dividend to Spirit stockholders following the vote approving the combination. A Frontier-Spirit combination is procompetitive, and the increased reverse termination fee, coupled with the greater likelihood to close, provides substantially more regulatory protection for Spirit stockholders than JetBlue’s offer. In this light, Spirit stockholders are really weighing the full value of the Frontier combination against the value of JetBlue’s proposed termination fee of $350 million, or $3.20 per Spirit share, which is the most likely outcome for Spirit stockholders if Spirit were to move forward with an acquisition by JetBlue.

• A Spirit acquisition by JetBlue would lead to an antitrust dead end—a fact that no amount of JetBlue money, bluster or misdirection will change. JetBlue has thrown up a lot of smoke to have you believe that the regulatory risk of its proposal is identical to the Frontier-Spirit combination. That is not true and requires you to ignore common sense and JetBlue’s own admission about what it intends to do immediately upon acquiring and eliminating Spirit: remove seats and raise prices, both antitrust non-starters. Conversely, a Spirit-Frontier merger is demonstrably pro-consumer, as many analysts and third parties have already acknowledged, given that it will expand ultra-low fare service to more destinations and provide more ultra-low fare alternatives to the Big Four and JetBlue. 

• Employees support the Frontier-Spirit combination. The Association of Flight Attendants (“AFA”), which represents over 4,600 flight attendants at Spirit and 2,900 flight attendants at Frontier, has publicly stated that it believes the Spirit-Frontier combination will significantly benefit employees of both airlines. That is far from the case at JetBlue. The Transport Workers Union (“TWU”) has publicly stated that it opposes JetBlue’s proposed takeover of Spirit, noting JetBlue’s intention to eliminate thousands of jobs and low-cost flight options for customers as part of its proposal. Further, the TWU has publicly admonished JetBlue for being an abusive employer that disregards the well-being of its workforce by refusing to abide by its existing union contracts. An airline’s team members are absolutely essential to its success as a company. There is a stark contrast in how employees would react to the Frontier-Spirit combination compared to a potential acquisition by JetBlue.

• Together, Frontier and Spirit will supercharge the ultra-low-cost carrier model to increase industry competition. The strategic rationale of the Spirit-Frontier combination is simple—we are building an airline that can realize the competitive potential of the ULCC model. Our transaction will bring scale, capability, and resilience, making it possible to bring ultra-low fares to more routes in competition with larger, high-cost, high-fare airlines. A combined Frontier and Spirit will stimulate demand by inducing people to fly when the high fares offered by JetBlue and the Big Four would otherwise price them out of the market, including in underserved communities. These are substantial, sweeping procompetitive effects. With inflation rising and airfares increasing, it is more important than ever to have a low-cost alternative with nationwide scale. In stark contrast, JetBlue’s offer is about a higher-cost airline’s taking out a major low-cost competitor, resulting in what JetBlue has admitted will be stark anticompetitive effects: far fewer seats and higher fares.  

Do not be fooled by JetBlue’s attempt to disrupt a compelling combination that will provide real and lasting value for Spirit stockholders and consumers. We strongly urge you to consider the superior value of the Spirit-Frontier combination, our compelling pathway to completion and the unmatched benefits our combination provides for all stakeholders and the broader marketplace.