JetBlue and Spirit near takeover deal that could come Thursday Source

July 28 (Reuters) – JetBlue Airways Airlines (JBLU.O) Nearing a deal to buy Spirit Airlines (Save. N) It may be announced as soon as Thursday, a source familiar with the matter said, after Spirit canceled its $2.7 billion sale to Frontier Group Holdings Inc. (ULCC.O).

The latest developments mark a victory for JetBlue in its months-long battle for the ultra-low-cost carrier, although the potential group is expected to start a fight with antitrust regulators, who have already sued to block JetBlue’s alliance with American Airlines. (AAL.O).

The combination of JetBlue and Spirit will create the fifth largest airline in the US and will be the most significant merger in the US aviation industry since the Alaska Air Group (ALK.N) It bought Virgin America Inc for $2.6 billion in 2016.

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The source said JetBlue is offering terms similar to what it proposed earlier. In June, JetBlue offered $33.50 per share to Spirit, or approximately $3.7 billion, and breakup fees of $400 million.

It will also maintain its Northeast Alliance (NEA) partnership with America, but is expected to announce secondary road liquidations to ease antitrust concerns, according to the source.

The Wall Street Journal first reported on the potential agreement between JetBlue and Spirit.

JetBlue and Spirit did not respond to Reuters requests for comment outside of normal business hours.

The source spoke on condition of anonymity before the official announcement of the agreement.

Earlier on Wednesday, Spirit canceled its sale to Frontier after it failed to convince shareholders of its merits.

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The development, first reported by Reuters, came after Spirit backtracked on a shareholder vote on the Frontier deal four times, hoping it could muster enough support. Spirit has previously argued that antitrust regulators are unlikely to clear JetBlue’s $3.7 billion bid.

The result was a setback for Frontier and its president, Bill Frank, who was instrumental in initiating talks between the two sides last year. Frank’s airline-focused company, Indigo Partners, is a major shareholder in Frontier.

“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed group, Frontier’s board of directors took a disciplined approach,” Frank said in a statement.

JetBlue sees Spirit as an opportunity to expand its domestic presence at a time when the US airline industry is suffering from a shortage of labor and aircraft.

“We are pleased to finalize our merger agreement with Frontier and are engaged in ongoing discussions with Spirit to reach a compromise agreement as soon as possible,” JetBlue said in a statement.

Antitrust risk

But the soul can also choose to remain independent.

The airline has expressed concern about JetBlue’s partnership with American. The US Department of Justice filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would raise prices at busy airports in the Northeast US.

JetBlue refused to withdraw from the alliance and instead offered sweeteners such as higher break-up fees and route liquidation.

Frontier shares rose 6.4 percent to close at $11.27 Wednesday as investors expressed relief at the company’s exit from what became a bidding war on Spirit. Spirit shares rose 4% to $24.30, while JetBlue shares rose 3.6% to $8.35.

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With the end of the proposed Spirit-Frontier agreement, Spirit will pay Frontier $25 million for the merger-related costs it incurred. Under the terms of the deal, Spirit will owe Frontier an additional $69 million if it ends up concluding a merger deal with JetBlue or another competitor within the next 12 months.

“Now that Spirit Airlines has finalized the Frontier merger agreement, we hope that Frontier management will put aside its distraction from the merger and invest the same amount of resources and focus on improving conditions at its own airlines,” the Frontier Pilots Association said. A subset of the Airline Pilots Association (ALPA).

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Additional reporting by Anirban Sen and Greg Rumiliotis in New York Additional reporting by David Shepardson and Gopi Babu in Bengaluru Editing by David Gregorio and Juralikumar Anantharaman

Our criteria: Thomson Reuters Trust Principles.

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