“In the short to medium term, we consider it negative for JetBlue. It is a much more difficult merger to perform than the proposed Frontier-Spirit merger with greater synergies related mainly to labor costs but also due to larger investments related to layout change. “While leverage levels seem manageable, the rise is likely to weigh on the investment climate,” said Raymond James Savanthi Syth, an analyst, in a research note Wednesday. We admit it, we did not see it coming. “ The analyst downgraded her JetBlue rating to Market-perform from Out-perform. JetBlue offered to buy Spirit for $ 3.6 billion late Tuesday, or $ 33 per share. The offer contradicts one from Frontier in February, which offered $ 25 per share. Shares of JetBlue fell 6% in Wednesday’s session as investors worried about a costly buyout. If Frontier and Spirit are combined, the airline will be the fifth largest in the United States and gain the strongest resilience in the West. It would mean the biggest deal for major airlines since Alaska Airlines merged with Virgin America in 2016. ARCHIVE – A Spirit Airline aircraft flying over Gloucester City, NJ, approaches Philadelphia International Airport on Friday, October 22, 2021. JetBlue Airways has offered to buy Spirit Airlines for about $ 3.6 billion and shoot down a Spirit mergers with rival financial company Frontier Airlines. Spirit announced on Tuesday, April 5, 2022, that its board of directors will evaluate JetBlue’s offer and decide what is best for its shareholders. (AP Photo / Matt Rourke, Archive) If JetBlue lands Spirit, it would greatly enhance its presence on the East Coast. But this strong presence could be an obstacle for JetBlue to win the new cloud collision. “In contrast to the exciting Spirit-Frontier combination, the acquisition of Spirit by JetBlue, a high-fare company, would lead to more expensive travel for consumers. In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit consumer choices. “It’s surprising that JetBlue is considering such a merger right now, as the Department of Justice is currently suing to block their outstanding alliance with American Airlines,” Frontier said in a statement following JetBlue’s offer. The merger between Frontier and Spirit – considered by professionals to be more synergistic and consumer-friendly – has already hit the radar of Democratic senators Bernie Sanders and Elizabeth Warren. They both fear that the removal of a competitor in the market could increase the prices of airline tickets. The story goes on So it’s hard to imagine JetBlue taking off more easily than regulators. “For decades, the airline industry has been plagued by increasing integration, producing huge airline giants, leaving consumers and employees behind. As the proposed Spirit-Frontier merger threatens to exacerbate these trends – including possible price increases during a period of high inflation – we urge the Department of Justice (DOJ) and the Department of Transportation (DOT) to carefully review this major for possible breaches of the Clayton Act and for concerns under 49 USC § 41105 and to oppose it if you consider it to threaten competition in the airline industry or in the “public interest”, Warren, Sanders and several other lawmakers said. in a statement. Frontier’s Biffle said he understood the regulators’ concerns, but this time it was different. “Look, I do not know they are wrong. I think they are worried about what happened to previous mergers, and we share that concern. That is why this merger is so important today because it is different from anything else we have had in the past,” Biffle added. . It is unclear whether JetBlue executives understand these concerns. However, Wall Street generally hates the deal. “The Frontier proposal will go through the ring. Obviously JetBlue is a very big player from Frontier. There will be some repulsion in the future, for sure,” MKM Partners analyst Conor Cunningham told Yahoo Finance Live. A JetBlue spokesman did not respond to a request for comment from Yahoo Finance CEO JetBlue CEO Robin Hayes. Brian Sozzi is the Editor-in-Chief and Presenter at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and LinkedIn. Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube and reddit
