JetBlue strikes a deal to sell Spirit's LaGuardia operation if it succeeds in buying Spirit

JetBlue Airways said Thursday it has agreed to sell Spirit Airlines’ holdings at New York’s LaGuardia Airport to Frontier Airlines if it succeeds in buying Spirit.

The announcement seemed designed to persuade regulators to approve JetBlue’s proposed $3.8 billion takeover of Spirit. The Justice Department and several states have sued to block the deal, arguing that it would reduce competition and drive up fares by eliminating low-fare Spirit.

Frontier is the ideal buyer for the LaGuardia operation, in JetBlue’s view, because it is the nation’s second-biggest budget airline, after Spirit.

“We are committed to ensuring our combination with Spirit preserves ultra low-cost carrier access in New York,” JetBlue CEO Robin Hayes said. “We are pleased that this agreement with Frontier will maintain the same level of ultra low-cost carrier service at LaGuardia Airport.”

Denver-based Frontier tried to buy Spirit last year – the boards of both airlines agreed on a sale — but was outbid by New York-based JetBlue.

Spirit’s holdings at LaGuardia include six gates at the Marine Air Terminal and the rights to 22 daily takeoff and landing times or “slots.” Because of congestion in the New York area, slots are limited at LaGuardia and John F. Kennedy International Airport, making them particularly valuable to airlines like Frontier that hope to grow in the New York market. Financial terms were not disclosed.

Frontier CEO Barry Biffle said the agreement “will enable us to significantly expand our operations at LaGuardia” and reach more consumers in the New York City area.

The move by JetBlue to divest some Spirit assets comes two weeks after a federal judge sided with the government and struck down a JetBlue-American Airlines partnership on New York and Boston flights, saying the deal violated antitrust law. A different judge in Boston is handling the government’s lawsuit against the JetBlue-Spirit sale, with a trial scheduled for October.