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Spirit Airlines CEO: JetBlue posturing ‘a little childish’ ahead of Frontier deal

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Spirit Airlines CEO Ted Christie joins Yahoo Finance Live to discuss the bidding war between JetBlue and Frontier over acquisition of the airline, inflation, and the outlook for shareholders ahead of tomorrow’s announcement.

Video transcript

[MUSIC PLAYING]

BRIAN SOZZI: The battle for Spirit Airlines is coming to an end with a key shareholder vote later this week. Frontier is still seen as the front runner to land Spirit, despite JetBlue's higher offer price. Joining us now is Spirit Airlines CEO Ted Christie. Ted, good to see you here on with us on what is going to be a really big day for your company tomorrow. Take us through this deal. Why is Spirit-- why have you guys said that the JBLU deal, why has it been poorly thought out?

TED CHRISTIE: Thanks. Thanks for having us on this morning. We're really excited about this deal with Frontier. This is an opportunity that's unique in the aviation space, where we're going to put together two really powerful ULCCs. Both of those companies today serve at the lowest fare, so it's a very pro-competitive story for consumers. We think, in fact, by combining the business, we're going to create a more powerful competitor to the big four airlines. It'll actually drive as much as a billion annually in fare savings for our consumers.

There's also a good synergy story here for our shareholders and a very positive story for team members, creating nearly 10,000 jobs over the next five years. So a really positive deal in a difficult market, but a way for us to create a more viable competitor in the US.

BRIAN SOZZI: And Ted, we just had Robin Hayes over at JetBlue on with us. Take a listen to what he had to say. We'd love to get your reaction on the other side.

ROBIN HAYES: A Spirit-JetBlue tie up gives us a real opportunity to create a strong national competitor to the large four airlines in the US that we know dominate the landscape, and offer low fares and great service. And I think that is what we are uniquely positioned to do. We truly believe customers should not have to choose between the low fare and a great service. They should have both.

BRIAN SOZZI: Now, Ted, have you been surprised by some of Robin's just, I think, commentary? You talk to a lot of folks in the industry and I think they have been surprised by how forcefully he has come out in recent weeks.

TED CHRISTIE: Yeah. I mean, obviously we were surprised in the beginning when we heard from them nearly three months ago with their unsolicited proposal. And I think once their position turned hostile with us, the rhetoric has really kind of dominated, which, in my view, is at this point appearing a little childish.

We're big, sophisticated businesses. We're interested in delivering real value to our shareholders. We think our deal with Frontier can do that and benefit the consumer. And we have real concerns about a combination with JetBlue, and what that might mean for the consuming public, and for that reason, be a very difficult regulatory narrative.

We made that clear to the guys at JetBlue from the beginning, and we spent nearly three months trying to get them to a point where they could convince us that they had a story that could get across the goal line with the DOJ and with regulators, and they simply wouldn't do it. They kept throwing up walls and road blocks. And so we had a very attractive bird in the hand here with Frontier, and we think it's the right deal for our shareholders, and looking forward to the vote tomorrow.

JULIE HYMAN: The vote is tomorrow, as you say, so this is going to hinge on that. And I'm sure you've been having a lot of conversations with shareholders, as well as conversations with people like us to try to get the word out to shareholders. What's your level of confidence here, that you're going to get the OK?

TED CHRISTIE: Well, since last week, Frontier did make an amendment to their proposal, and we've made that now public. At that time, ISS is now recommending for our transaction with Frontier, along with Glass Lewis, so we have all the proxy advisory services telling our shareholders they should vote for. We have a very pro story heading into the vote. We think we've got some good momentum now from both the retail side and institutional side heading into the vote.

So feeling positive, now. Really proud of the story that we have, proud of this group in what has been a challenging environment to continue to operate well. We've been over the course of the last month, been one of the best airlines in the business as it relates to operations. So a really positive story to tell there, and it's going to be a big day for us tomorrow.

BRAD SMITH: Ted, what role do you see yourself maintaining post-acquisition if it gets voted on?

TED CHRISTIE: Well, if you're talking about Spirit, we're going to be part of a big organization, and there's going to be opportunity for everybody to participate in that. And it's going to be an all hands on deck type consolidation with this business.

Again, as I said earlier, we are the lowest cost, lowest fare operators combined in the US. So we're going to need everybody to navigate the transition, and excited about the opportunities that it will deliver to Spirit shareholders and to Frontier shareholders. And I'm going to do my best to make sure that's a total success, regardless of what's required of all of us. And I know our team is aligned on that here.

BRIAN SOZZI: Ted, as a veteran of the airline industry, I'm just curious on what this process has been like for you.

TED CHRISTIE: Well, it's been in education. Like you said, I've been in the airline business for 20 years, and I've seen a lot of the ups and downs. And one of the best parts of being part of this industry is you're never bored, and there's always something exciting around the corner. I've certainly seen that over the last three or four months, so I can tick that all away and put that in my book someday.

But I'm extremely proud of this organization. Spirit has built a fantastic company, a really good company over the last 10 to 20 years, and one that we can all be extremely proud of. And the organization has rallied during this time. And the pandemic was tough for all of us, but I'm really proud to say we've landed with our feet firmly planted and intact and ready to continue to grow.

BRAD SMITH: We'll be looking out for that book for sure, Ted. Just while we have here, as well, I mean, this has been a tough time for employees, for investors in the airlines, but also for customers, who are in this point in time looking at higher fares. Of course, Spirit comes in at the lower cost side of, that but also, it comes with a customer that has detracted more from Spirit than has added to the net promoter score. And so what changes would you like to see made in Spirit post-acquisition that would help with the perception in how Spirit is looked at in the broader landscape?

TED CHRISTIE: Well, it has been an evolution here at Spirit over the last five years or so. We've put tremendous effort into improving the company's reputation, its brand perception, and all of that's tied to its operational performance. And as I said earlier, we've been running really well lately, so continuing that into the summer is going to be a big step for us, as well.

I know it's been tough on the consumer and the traveler. This has been a difficult period as businesses, broadly speaking, get re-staffed and deal with supply chain issues and inflation and all that, but we have been a steady climber here. The brand perception, our net promoter scores, all those things have been trending in the right direction.

And when we combine with Frontier, that's going to give our guests more opportunities to travel, more new places to go, a tremendous opportunity, broadly speaking, to be a loyal customer of that combined business. And more importantly, we're going to continue to drive low fares into what is a heavily consolidated industry at the top end. The top four airlines control nearly 80% of the capacity in the United States, and we're 4% today. So we're hoping that combination can actually lend to the competitive story that the government's looking for.

BRAD SMITH: Spirit Airlines CEO Ted Christie. Ted, we appreciate the time here today. We'll be staying tuned for that vote for sure.

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