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Spirit Airlines has rejected a merger offer with Frontier as it prepares to exit bankruptcy. Wednesday, Frontier made its second offer to merge with the bankrupt Spirit Airlines, but Spirit rejected it on the grounds that it was financially insufficient. In 2022, Frontier offered to acquire Spirit for $2.9 billion, but the offer was ultimately rejected when Spirit chose to accept a higher offer from JetBlue (which was later blocked for antitrust concerns). Frontier Airlines put forward its current merger offer in hopes of creating a strong, low-fare airline together. “We have long believed a combination with Spirit would allow us to unlock additional value-creation opportunities,” said Barry Biffle, CEO of Frontier, in a statement. In a joint letter to Spirits chair and CEO, Biffle and Frontiers chair of the board added that they believe the transaction generates more value for all Spirit stakeholders than Spirits current plan filed to the Bankruptcy Court. But Frontiers offer was lower than the amount the two parties had discussed in 2022, Raniero DAversa, an attorney and market-leading practitioner in bankruptcies, out-of-court restructurings, and creditors’ rights controversies, tells Fast Company. In Frontiers offer, debt holders would receive $400 million in new debt and 19% of Frontiers common equity. It would also require stakeholders to invest $350 million in equity, which they were not willing to do, according to a regulatory filing. The offer appears to be too little, too late, DAversa says. In its rejection of the offer, Spirit said that the board believes Frontiers proposal is so insufficient as not to merit a counter. Accepting or considering this offer could also interfere with the airlines plans to exit bankruptcy, which it had filed for in November. Spirit Airlines is on a fast track to exit, DAversa says. Any serious consideration of the Frontier offer would derail the whole bankruptcy process, which is overwhelmingly supported by its constituents. The airline has a February 13 court date to finalize its exit plan. While a company and its board have a fiduciary obligation to consider any deal for the benefit of its constituents and equity holdersand in the case of bankruptcy, its creditorsthey’re under no obligation to actually accept it. Although Spirit has operated normally during its bankruptcy, the airline has cut 200 jobs and sold some Airbus planes in order to raise millions of dollars. DAversa compares the situation to the classic “a bird in the hand . . . ” idiom. Spirit is lined up to come out of bankruptcy imminently, and it appears the airline is ready to fight through its final month rather than merge.
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E-Commerce
President Donald Trump‘s budget office on Wednesday rescinded a memo freezing spending on federal grants, less than two days after it sparked widespread confusion and legal challenges across the country. The Monday evening memo from the White House Office of Management and Budget sparked uncertainty over a crucial financial lifeline for states, schools and organizations that rely on trillions of dollars from Washington and left the White House scrambling to explain what would and wouldn’t be subject to a pause in funding. The reversal was the latest sign that even with unified control of Washington, Trump’s plans to dramatically and rapidly reshape the government has some limits. The White House confirmed that OMB pulled the memo Wednesday in a two sentence notice sent to agencies and departments, but said that Trump’s underlying executive orders targeting federal spending in areas like diversity, equity and inclusion and climate change, remained in place. Administration officials said the notice to halt loans and grants was necessary to conduct a review to ensure that spending complies with Trumps recent blitz of executive orders. Agencies had been directed to answer a series of yes or no questions on each federal program by Feb. 7. The questions included does this program promote gender ideology? and does this program promote or support in any way abortion? Still, the vaguely worded memo, combined with incomplete answers from the White House throughout the day, left lawmakers, public officials and average Americans struggling to figure out what programs would be affected by the pause. Even temporary interruptions in funding could cause layoffs or delays in public services. The freeze was scheduled to go into effect at 5 p.m. Tuesday, but was stayed by a federal judge until at least Monday after an emergency hearing requested by nonprofit groups that receive federal grants. An additional lawsuit by Democratic state attorneys general was also pending. The Executive Orders issued by the President on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments, White House press secretary Karoline Leavitt said, blaming the confusion on the courts and news outlets, not the administration. This action should effectively end the court case and allow the government to focus on enforcing the Presidents orders on controlling federal spending.” Administration officials insisted that despite the confusion, the order still had its intended effect by underscoring to federal agencies their obligations to abide by Trump’s executive orders. Although Trump had promised to turn Washington upside down if elected to a second term, the effects of his effort to pause funding were being felt far from the nations capital. Organizations like Meals on Wheels, which receives federal money to deliver food to the elderly, and Head Start which provides early childcare in lower income communities, were worried about getting cut off. On Tuesday, Trump administration officials said programs that provide direct assistance to Americans, including Medicare, Social Security, student loans and food stamps, would not be affected. But they sometimes struggled to provide a clear picture. Leavitt initially would not say whether Medicaid was exempted from the freeze, but the administration later clarified that it was. Democratic critics of the order moved swiftly to celebrate the action. This is an important victory for the American people whose voices were heard after massive pressure from every corner of this countryreal people made a difference by speaking out,” said Sen. Patty Murray, D-Wash. “Still, the Trump administrationthrough a combination of sheer incompetence, cruel intentions, and a willful disregard of the lawcaused real harm and chaos for millions over the span of the last 48 hours which is still ongoing.” Senate Democratic leader Chuck Schumer of New York said that Americans fought back and Donald Trump backed off. Chris Megerian and Zeke Miller, Associated Press
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E-Commerce
On Tuesday, President Trump issued a sweeping freeze on federal funding that drew widespread confusion before later being rescinded. But it was quickly followed by another pronouncement that could have major ripple effects across the federal government. In a move that echoed Elon Musk’s proposal to Twitter employees back in 2022down to the email subject linethe Trump administration made a surprising offer to two million federal workers. If they voluntarily resigned, they would receive full pay through the end of September; otherwise, they would risk being furloughed or reclassified as at-will employees. Those who stayed would also have to abide by the new return-to-office policy, which would require them to come in daily. Workers were told they had just over a week to consider and accept the offer. The bold announcement was, again, teased by Musk (and Vivek Ramaswamy) last year in an op-ed in the Wall Street Journal about plans for the Department of Government Efficiency (DOGE). “Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome,” they wrote at the time. But Trump’s “deferred resignation” offer has elicited more questions than answers among federal workers and observers who have questioned whether it is legally sound. How will the buyouts work? Many federal workers were reportedly confused about whether they would be expected to continue working if they moved forward with the offer. Some workers were also unsure if the offer even applied to their roles, given the exemptions for those in certain roles across national security and immigration enforcement. In its memo, the Office of Personnel Management (OPM) said workers should send an email with the subject line “Resign” if they wished to leave. But the deferred resignation letter they were asked to accept suggested that being placed on leave was only one potential outcome. “I understand my employing agency will likely make adjustments in response to my resignation including moving, eliminating, consolidating, reassigning my position and tasks, reducing my official duties, and/or placing me on paid administrative leave until my resignation date,” the letter read. In an FAQ section, however, the OPM noted that “Except in rare cases determined by your agency, you are not expected to work.” Multiple posts on X from Elon Musk and the official DOGE account confirmed that information, and a senior White House official also told Axios that workers would not have to keep working if they accepted the offer, aside from taking care of customary tasks like returning work devices. Still, the American Federation of Government Employees (AFGE)the union that represents hundreds of thousands of federal workershas instructed its members not to accept the terms of the resignation offer. (In fact, many workers seem more emboldened to stay put following the proposal.) In a statement, AFGE president Everett Kelley said Trump’s ploy to cut millions of federal workers would have “vast, unintended consequences that will cause chaos for the Americans who depend on a functioning federal government.” The AFGE has also pushed back on the characterization of this offer as a buyout, arguing that it does not guarantee an employee’s resignation will be accepted or that they will receive the benefits being promised. “This offer should not be viewed as voluntary,” Kelley added. “Between the flurry of anti-worker executive orders and policies, it is clear that the Trump administration’s goal is to turn the federal government into a toxic environment where workers cannot stay even if they want to.” (The OPM did not respond to a request for comment.) Is any of this legal? Beyond the question of whether federal employees who resign will be expected to work in any capacity, it’s not clear whether the Trump administration can legally make an offer of this scale. Federal workers are not typically allowed to be on paid administrative leave for more than 10 days in a given year, and Trump has not received budget authorization from Congress for the buyouts. Some federal employees have already expressed concerns that they won’t see the money that Trump has promised. The AFGE and Democrats such as Senator Tim Kaine have also cautioned that federal employees who quit may not be guaranteed months of pay. “Theres no budget line item to pay people who are not showing up for work,” Kaine said on the Senate floor this week. “If you accept that offer and resign, hell stiff you.
Category:
E-Commerce
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