Until the breakout of the Covid-19 pandemic, I did not pay a lot of attention to the airline industry. With the pandemic wreaking havoc in the global travel industry and bringing air travel to a complete halt, I started following the industry closely to identify contrarian investment opportunities. Southwest Airlines Co. (LUV) has always remained my number one pick in the industry for reasons I have shared with the Seeking Alpha community over the last couple of years. The merger saga involving Spirit Airlines, Inc. (SAVE), Frontier Air Group (ULCC), and JetBlue Airways Corporation (NASDAQ:JBLU) has caught the attention of many investors, and I looked at each of these three companies closely to determine whether there is an opportunity in the low-cost and ultra-low-cost airline space in the United States. In this article, the focus will be on JetBlue Airways which is continuing to push Spirit shareholders to agree to its hostile bid.
Why Has JetBlue Stock Dropped?
JetBlue Airways Corporation is the sixth-largest airline in the U.S., operating as a passenger air transportation company operating both domestically and internationally in 26 countries in Latin America, the Caribbean, and Europe. The company is a low-cost carrier offering high-quality services including assigned seating and in-flight entertainment.
JetBlue stock recovered fast from the pandemic lows of around $6.80 to reach a peak of over $21 in March 2021. Since then, however, the stock has lost momentum. The rejection of JetBlue’s upgraded offer to acquire Spirit Airlines was one of the main reasons behind the decline in stock price recently. Spirit’s board of directors decided that the unsolicited offer of $33 per share by JetBlue in cash is by no means a ‘Superior Proposal’ to the one from Frontier Airlines. Spirit also cited regulatory concerns regarding the proposed deal due to JetBlue’s partnership with American Airlines (AAL).
JetBlue…