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Spirit Airlines could be owned by JetBlue or Frontier: former United Airlines CEO

Brian Sozzi
·Executive Editor
·2 min read

Former long-time United Airlines CEO Oscar Muñoz says consolidation in the airline industry makes sense, and there is a pathway for Spirit Airlines to be owned by JetBlue or Frontier Airlines.

"If I was at United, I would be supportive of this," Muñoz said on Yahoo Finance Live. "Consolidation will help the level of service. There likely may be concessions. One of the two [carriers] should be able to pull it off."

Last week, JetBlue shocked Wall Street by offering to buy Spirit for $3.6 billion for $33 a share. The bid counters one from Frontier in February, which put forth a $25 a share bid.

Frontier has not upped its bid, and there hasn't been any indication it will.

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JetBlue CEO Robin Hayes has ramped up his pressure on Frontier Airlines, saying his company's surprise deal for low-fare rival Spirit Airlines makes much more sense.

"A bigger JetBlue is profoundly good and better for competition than a Spirit and Frontier combination," Hayes said on Yahoo Finance Live.

Spirit Airlines said this week it will hold talks with JetBlue.

FILE - A Spirit Airline aircraft flying over Gloster City, N.J., approaches Philadelphia International Airport Friday, Oct. 22, 2021. JetBlue Airways has offered to buy Spirit Airlines for about $3.6 billion and break up a plan for Spirit to merge with rival budget carrier Frontier Airlines. Spirit said Tuesday, April 5, 2022, that its board will evaluate the JetBlue bid and decide what's best for its shareholders. (AP Photo/Matt Rourke, File)

The merger between Frontier and Spirit — seen by pros as being more synergistic and consumer friendly —has already come across the radar of Democratic Senators Bernie Sanders and Elizabeth Warren. Both fear the removal of a competitor in the marketplace could send airfare prices higher.

The fact Spirit shares trade at $25 — below JetBlue's offer prices — underscores the regulatory risk.

“For decades, the airline industry has been plagued by increasing consolidation, producing massive airline giants while leaving consumers and workers behind. Because the proposed Spirit-Frontier merger threatens to exacerbate these trends — including by potentially increasing prices during a period of high inflationary pressure — we urge the Department of Justice (DOJ) and the Department of Transportation (DOT) to closely review this mega merger for potential violations of the Clayton Act and for concerns under 49 U.S.C. § 41105 and to oppose it if you determine it will threaten competition in the airline industry or ‘the public interest,'" Warren, Sanders and several other lawmakers said in a statement.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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