Spirit Airlines has postponed shareholder vote on Frontier acquisition

• Spirit Airlines has postponed its shareholder meeting, which was originally scheduled for Friday, until June 30.
• The carrier will continue discussions with Frontier Airlines and JetBlue Airways about competing offers.
• Frontier and JetBlue both increased their promotions in the last week.

Spirit Airlines has postponed its shareholder meeting, which was scheduled for Friday, until June 30 in order to continue talks with Frontier Airlines and JetBlue Airways, as well as with its stockholders, the carrier announced on Wednesday.

Spirit’s stock fell more than 2% on Wednesday, while Frontier’s fell more than 3% and JetBlue’s fell more than 4%, outpacing the market’s decline.

Spirit’s announcement came just two days after JetBlue increased its bid for the discount airline, which has been in talks with fellow budget carrier Frontier since February. At the Spirit shareholder meeting on Friday, shareholders were expected to vote on the cash-and-stock Frontier transaction. JetBlue urged Spirit stockholders to vote no.

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Frontier and JetBlue both say Spirit Airlines is critical to their future growth. Either combination would result in the fifth-largest airline in the United States.

Spirit has repeatedly rejected JetBlue’s offers and stated that an acquisition would be unlikely to pass muster with regulators, whereas JetBlue has claimed that both deals would face Justice Department scrutiny.

JetBlue had previously offered to sell some of Spirit’s assets in New York and Florida in order to make the deal more appealing to regulators. Access to Spirit’s Airbus order book and pilots, according to the company, will “turbocharge” its growth and allow it to compete with larger airlines.

If the Justice Department blocks JetBlue’s purchase of Spirit, the airline raised its offer for a reverse split to $350 million on Monday. If the deal is rejected by regulators, Frontier will pay a $250 million reverse breakup fee to Spirit shareholders.

“We welcome this development as a necessary first step toward genuine negotiation between the Spirit Board and JetBlue,” JetBlue CEO Robin Hayes said in a statement Wednesday. “Spirit shareholders are clearly urging the Spirit Board to engage with us constructively and provide us with the same information previously made available to Frontier so that we can reach a consensual transaction.”

Spirit is still bound by its merger agreement with Frontier, and the company’s board has not determined that JetBlue’s offer is superior to the existing deal, according to Spirit CEO Ted Christie in a memo to employees on Wednesday. Spirit did not respond immediately to JetBlue’s claim that Spirit shareholders want the company to work with JetBlue.

Glass Lewis, a proxy advisory firm, advised shareholders last week to vote in favor of the Frontier deal, while ISS advised them to vote against it.

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“As our Board pursues the course of action that is in the best interests of our stockholders, they will also continue to prioritize the best interests of our Team Members and Guests,” Spirit CEO Ted Christie said in the note to staff.

Frontier declined to comment.