JetBlue Airways (B6, New York JFK) has initiated a hostile takeover bid for Spirit Airlines (NK, Fort Lauderdale International), two weeks after the Floridan ultra-low-cost carrier rejected an enhanced offer from its bigger New York-based rival.

JetBlue Airways Corporation subsidiary Sundown Acquisition Corp said in a filing on May 16 that it was offering to buy all of the outstanding shares of the ULCC’s common stock for USD30 per share in cash. Its earlier offer was USD33 per share. It also filed a proxy solicitation opposing Spirit’s planned merger deal with Frontier Airlines (F9, Denver International) parent Frontier Airlines Holdings.

In an open letter to Spirit’s shareholders on the same day, JetBlue CEO Robin Hayes said it was “fully prepared to negotiate in good faith a consensual transaction at USD33, subject to receiving necessary diligence.”

However, even the new proposal “represents a 60% premium to the value of the Frontier transaction as of May 13 - a very compelling offer and higher than the premium implied by JetBlue’s original proposal,” the letter urged. Spirit shareholders are due to vote on the proposed Frontier merger on June 10.

“JetBlue offers more value - a significant premium in cash - more certainty, and more benefits for all stakeholders. Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their own regulatory challenges,” the letter added.

Spirit Airlines responded in its own statement that “consistent with its fiduciary duties and applicable law, and in consultation with outside financial and legal advisers,” its board “will carefully review” JetBlue’s offer and tell its shareholders about its position within ten working days. It added that its “stockholders are urged to take no action with respect to the JetBlue tender offer at this time pending the board’s evaluation of the offer.”

Spirit had previously argued that JetBlue’s proposals involve “an unacceptable level of closing risk that would be assumed by Spirit stockholders” and that such a deal would have a low chance of securing the approval of government regulators. JetBlue retorted that a deal with Frontier faces similar risk.

Hayes told Spirit shareholders: “Spirit’s board is prioritising its own self-interest and personal relationships with Frontier over its shareholders’ interests.”

He claimed that “multiple Spirit directors involved in the decision to merge with Frontier have significant ties to [Frontier chairman and budget airline investor] Bill Franke, who appointed each to the Spirit board when he was chairman of Spirit, and while Indigo Partners (the current controlling shareholder of Frontier) was a large shareholder of Spirit.” Franke is understood to have orchestrated the Frontier-Spirit deal.

“Ask yourself a simple question: why won’t the Spirit board engage with us constructively? The interests of Bill Franke’s Indigo Partners and the longstanding relationships between the two companies is the obvious answer,” the letter stressed.

Frontier Airlines did not immediately respond to ch-aviation’s request for comment.