See, the first time that Spirit Airlines postponed a vote by its shareholders on whether to accept a merger deal with Frontier Airlines or a takeover bid by JetBlue, they said all the right things.
'Furthering our talks with Frontier and JetBlue,' 'Exploring our options,' 'Doing our due diligence.' All that corporate stuff that sounds so nice.
And, for the most part, after the two competing airlines continued to play the one-upmanship game with renewed and better bids, even the second postponement was believable.
But here we are again, and for the third time Spirit again adjourned a shareholder vote that was to take place yesterday, Friday, July 8.
As if we didn't have an inkling of this before, here's why:
They. Don't. Have. The. Votes.
At least, Spirit's upper management doesn't have the votes. It's clear by now that Spirit CEO Ted Christie and the Board would like the merger deal with Frontier. It's also clear that Spirit's stockholders prefer the JetBlue offer. Both sides have a legitimate point.
For the shareholders, the financial return on investment is greater. JetBlue has continually raised its offer on share price. Some Spirit stockholders have thousands, tens of thousands, even hundreds of thousands of shares invested in the low-budget carrier. Getting out at $33.50 per share is quite the exit package. I mean, if it was me, I would vote for that deal at half the share price plus a meet-and-greet with Elizabeth Hurley and a lifetime supply of Skittles. But that's just me. I digress.
For Christie and those at the C-suite level at Spirit, their concerns are valid as well. They fear the Department of Justice, and rightfully so. The DOJ and six individual states have a lawsuit that will be heard in court in September against JetBlue and American Airlines over their Northeast Alliance.
The Alliance is a pact to join forces and blanket coverage in the Northeast corridor of the country - arguably, with Washington D.C, Philadelphia, New York and Boston the most lucrative set of routes and the busiest landings/departures slots in the country.
The DOJ believes it creates a monopoly and will drive up airfares, and Christie is afraid that a JetBlue takeover of Spirit will result in regulatory denial of such a union. Again, a very important concern.
So, all that this postponing and adjourning and delaying has done is expose Spirit and the situation for what it has become - a deep, widening chasm between management and shareholders over which direction they should go.
You can bet that Spirit officials are actively recruiting shareholders that are on the fence, and you can bet that shareholders are actively recruiting fellow investors that have yet to make up their minds. It's not a good look.
But you can only delay and deflect for so long. At some point, Spirit is going to ask its shareholders to place an official vote on what they want to do, and all sides will have to live with the results.
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