Frontier sweetens offer for Spirit Airlines merger as shareholder vote looms

Frontier Airlines sweetened its offer to combine with fellow budget carrier Spirit Airlines, that airline said late Friday, less than a week before Spirit shareholders are set to vote on the deal.

The new offer for $4.13 per share, $2 per share higher than Frontier’s original cash-and-stock bid, comes after JetBlue Airways repeatedly upped its own offer to buy Spirit outright in an an all-cash deal.

The battle for Miramar, Florida-based Spirit has heated up in recent weeks. JetBlue has argued that the deal would help it better compete against large carriers and grow quickly when new planes and pilots are in short supply.

JetBlue would take over Spirit, while a Frontier-Spirit combination would create a discount carrier behemoth. Either transaction would create the country’s fifth-largest airline.

Spirit shareholders are set to vote on the Frontier deal at a shareholder meeting on Thursday.

Spirit CEO Ted Christie told CNBC that the airline’s board has evaluated JetBlue’s latest offer and still has doubts that regulators would approve the deal. The board, he said, still views a Frontier tie-up as “a superior transaction.”

JetBlue didn’t immediately comment.

Frontier’s sweetened offer also increases a proposed reverse break-up fee to $350 million, from $250 million previously, in the event the deal doesn’t get approved with regulators. That matches the reverse break-up fee JetBlue has offered. Frontier’s new offer includes a pre-payable amount of $2.22 to Spirit shareholders.

Christie said the board still had regulatory concerns about JetBlue’s Northeast Alliance with American Airlines, which allows the carriers to coordinate on flights and book passengers on each other’s planes. The Justice Department last year sued to undo that partnership.

Shares of all three airlines were lower in after-hours trading Friday.