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A Bold Move by JetBlue Could Derail the Spirit and Frontier Merger

The New York-based airline made an all-cash offer to acquire Spirit.

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In an effort to curb a likely merger between rival low-fare airlines, JetBlue made an unsolicited $3.6 billion offer to acquire Spirit if it ditches its plans to merge with Frontier — a significantly larger proposition than what's currently on the table.

If Frontier and Spirit merged as planned, the combined company would become the nation's fifth-largest airline, gliding right past JetBlue in size and customer base, which might explain the airline's desire to circumvent the operation.

As the market stands now, JetBlue and Spirit operate the same routes on 11% of flights, while Frontier and Spirit cover 18% of the same routes, according to data from aviation analytics firm Cirium. Frontier and Spirit also share a similar selling point, being what's known in the industry as "ultra low-cost carriers."

Although Spirit and Frontier's low costs are appealing to customers, their satisfaction rates were some of the lowest in the industry in 2021, according to data from the American Customer Satisfaction Index.

JetBlue's value proposition is that customers shouldn't sacrifice comfort for cost, offering a valuable customer experience without breaking the bank.

The fight for Spirit — or a significant airline merger like this — comes as no surprise as airlines have been combating financial obstacles brought on by two years of a global pandemic. The aviation industry reported a loss of a whopping $370 billion in 2020 alone. Even as passengers trickle back into airports, traveling looks different in 2022, and the industry is vying for travelers' loyalty by attempting to meet customer expectations, needs and desires.

Frontier and JetBlue are each arguing why they're the right partner for Spirit to propel forward successfully. JetBlue stated it would be able to offer comfort and better competition against other airlines that dominate the market. Frontier stated that its merger would allow for annual savings for consumers, and that the JetBlue merger would likely cause a surge in already rising prices. JetBlue's $3.6 billion, all-cash proposition to Spirit is significantly higher than Frontier's $2.9 billion stock-and-cash offer to the airline. However, Spirit put out a statement that it'll make its decision based on what's best for its stakeholders and the interests of its customers.

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