Spirit Airlines Gets Second Takeover Bid This Year: What Investors Should Know

Zinger Key Points
  • At this time, 70% of the U.S. airline market is controlled by four major airlines.
  • The new purchase offer from JetBlue for Spirit comes after a planned merger with Frontier Airlines.

Spirit Airlines Incorporated SAVE on Tuesday announced it received a purchase proposal from JetBlue Airways Corporation JBLU to buy the company’s outstanding shares for $33 apiece.

The unsolicited proposal from JetBlue amounts to a $3.6 billion price tag for the airline company. The announcement comes about two months after Frontier Group Holdings Inc ULCC, the parent company of Frontier Airlines, announced a $6.6 billion merger agreement with Spirit. At the time, Spirit and Frontier told investors that the planned merger will result in a stronger financial profile for the combined company, and allow them to compete even more aggressively in the airline space.

It’s unclear how the new purchase offer from JetBlue will impact the planned merger with Frontier Airlines. Although, CNBC's Jim Cramer quickly responded to the news, saying he doubts JetBlue's proposal will be approved by federal regulators.

Also Read: If You Invested $1,000 In American Airlines Stock At Its Pandemic Low, Here's How Much You'd Have Now

The battle between JetBlue and Frontier to capture Spirit comes amid an increasing number of mergers and acquisitions in the industry over the past 10 years. Currently, 70% of the U.S. airline market is controlled by four major airlines.

The announcement caused a spike in the price of Spirit airlines stock on Tuesday, and trading was halted before the close.

Price Actions: Shares of Spirit were up 22.37% and closed at $26.91, according to data from Benzinga Pro. Meanwhile, shares of JetBlue were down 7.08% to $13.64 and Frontier was up 3.92% to $11.92.

Posted In: airlineairline stocksJim CramerM&ANewsTravelTop StoriesMoversTrading IdeasGeneral

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