Jim Corridore, Senior Insights Manager at Similarweb, joined Closing Bell to break down the competing offers from JetBlue and Frontier as both airlines look to join forces with Spirit Airlines.

Closing Bell

JetBlue Ups Its Offer in Bid to Buy Spirit Airlines

Alright, JetBlue has sweetened the deal to buy Spirit Airlines now offering $31.50 per share. That's an added $50.50 from its last offer And meanwhile Frontier still moving forward on its attempt to acquire Spirit Airlines to, is joining us now is Jim corder, senior insights manager at data analytics companies, similar Web and Jim Jet Blue Clearly trying to strategically up the offer just before spirit shareholders vote on the bid from frontier on June 10. What do you make of this new bid? Yeah, obviously a dollar 50 extra share like you said, uh, definitely makes the offer more compelling. Uh, 31 50 a share is a 47% premium to what Frontier is offering. If we look at the share price of Frontier this morning. Uh, so the total value of that deal is about $21.39 definitely looks better for shareholders to go with the JetBlue deal. But first they have to denied Frontier when they vote on june 10th. Do you think this is enough to move the needle for Spirit shareholders? I mean, it's been my experience that investors tend to vote with their pocketbook and if they're gonna get 40 47% more now than they would otherwise they would tend to vote that way. But you know, they do have the backing of spirits board of directors on the Frontier deal that's compelling and proxy battles usually don't go the way of, of the outside party. So it's gonna be interesting to see what happens. I think that most likely Spirit shareholders probably would rather go with JetBlue because it offers more money. Now, Spirit has constantly rejected JetBlue's offers in the past. Tell us why is that? And how this money could perhaps make them feel a little more at ease. Yeah, I think that Spirit feels like they want to maintain their brand identity under the JetBlue proposal, they would disappear and they would be folded into the JetBlue name. Also, if we look at similar web data on a website traffic and we think that a combination with Frontier makes a lot of sense. They move into fifth place ahead of JetBlue in Alaska in terms of website traffic. Uh, that gives them a great opportunity to expand, uh, and definitely gain more pilots with the Frontier deal, JetBlue does grow as well. Obviously they get bigger, but they don't get big enough to come to really compete with United Delta, Southwest or american. So it's unclear to us what the real strategic value of a merger with JetBlue and Spirit is. While Frontier does seem to offer a compelling value now, like you mentioned, it would create America's fifth largest airline. What does that mean for the industry? Not only for a consumer standpoint, but from a, I guess competitor's standpoint. Yeah, I mean, obviously there's two scenarios here, so if JetBlue acquires Spirit, what happens is the destructive price competitor goes away and likely fares rise, consumers don't benefit if Frontier and Spirit grow together, they're creating a viable alternative to JetBlue to Alaska and to southwest. So there is more competition and probably better pricing in the future. So whichever way it goes, we'll have to see what the effect is on on consumers. So do you think Spirit would benefit more from a jet blue takeover as opposed to a frontier takeover? Frontier merger? Well obviously shareholders benefit more on day one because they're getting more money. But over the long term we see much more of a strategic rationale for frontier Spirit merger that would grow and expand to provide more value. Over time they operate a similar operating model, they're both discount carriers. JetBlue is more of almost like a network carrier at this point so that the operating models are different. Also Spirit does disappear. Like I said, their brand identity goes away. I do think over the long term more value would probably be created by the Frontier and Spirit merger. What other hurdles do you think JetBlue would have to go or jump over to get this deal closed? Well obviously there are regulatory hurdles mergers in airlines have happened throughout the airline industry's history. It seems to us that it would be allowed, but you know, JetBlue is offering a $350 million breakup fee. Frontier is only offering a $250 million breakup fee. So JetBlue is beating Frontier in that regard as well. Um, but again, you know, the most important thing is the market share as we go forward. And, you know, under similar Web data shows that, you know, Frontier and Spirit together will topple JetBlue, which seems to be the real rationale for JetBlue jumping in here to try and prevent that from happening, trying to save themselves understood. Jim Corridor, senior insights manager at data analytics companies. Similar Web Jim, Thank you for your excellent insight.