Spirit stocks jump 22% as takeover fight brews

Posted: 5 April 2022 6:10 pm
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A news report says JetBlue will try to acquire Spirit by outbidding rival Frontier. Should investors jump into Spirit as well?

Shares of Spirit Airlines (SAVE) jumped more than 22% this afternoon on a report that JetBlue Airways (JBLU) would try to acquire the carrier for $3.6 billion, upending a planned merger with Frontier Group (ULCC).
Sources told the New York Times that the deal would amount to $33 a share in cash, about 40% higher than Frontier’s cash and stock offer.
JetBlue shares fell about 7% on the news.
The board of Spirit hasn’t yet decided which offer to pursue, the Times said. But the surge suggests investors think Spirit is a hot commodity and will fare well however it turns out. With the stock price now at $27, a deal at $33 could mean a 22% gain.

Regulators on watch

Spirit and Frontier, budget airlines that cover generally different areas, have said a merger will benefit consumers. But several members of Congress, including Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, have suggested otherwise.
JetBlue has also faced federal scrutiny over a business partnership with American Airlines in the Northeast in which the two share schedules and planning. The Justice Department has sued to stop it.

Where the stocks stand

Airlines as a group have had a difficult couple of years with COVID-related slowdowns in travel. There have been signs of recovery in some airline stocks in 2022. JetBlue stock, down 31% over 12 months, is up 3% year to date.
Spirit, though, is down 42% over the past year and up only 1% year to date. And Frontier is down almost 16% year to date and 42% over 12 months.
For more on investing in airlines, read our guide.

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