By Shivansh Tiwary

May 4 (Reuters) - Shares of Frontier Airlines

and JetBlue Airways ( JBLU ) rose in premarket trading on

Monday, after rival Spirit Airlines shut shop, fueling hopes the

carriers can capture market share, control prices, and absorb

displaced passengers.

JetBlue ( JBLU ) shares were up about 5%, while Frontier gained 4%.

The bankrupt carrier Spirit ceased operations on Saturday,

becoming the industry's first casualty tied to the Iran war,

after failing to win creditor backing for a U.S. government

bailout plan.

Spirit canceled all flights and began a structured

wind-down, ending a 34-year run built on a no-frills model that

lost appeal after the pandemic as more travelers opted for

comfort.

Its exit could give rivals room to gain market share while

easing the fare wars that have squeezed margins across the U.S.

airline industry, particularly in leisure-heavy markets such as

Florida.

Spirit had 4,119 domestic flights scheduled between May 1

and May 15, offering 809,638 seats, according to data from

aviation analytics firm Cirium.

Both Frontier and JetBlue ( JBLU ) once pursued Spirit, with Frontier

moving first in early 2022 through a cash-and-stock merger deal.

JetBlue ( JBLU ) later outbid Frontier in a bidding war that ended in

a $3.8 billion agreement, but the tie-up was blocked by a

federal judge on antitrust grounds in January 2024.

FRONTIER, JETBLUE MOVE TO BENEFIT

Frontier, Spirit's closest rival in the ultra-low-cost

segment, had already been making gains in the Florida-based

airline's stronghold markets as Spirit cut capacity during its

bankruptcy proceedings, picking up price-sensitive passengers.

JetBlue ( JBLU ) has also been gaining ground on overlapping routes

and among travelers trading up from bare-bones flying, as it

seeks to build Fort Lauderdale into its third major hub after

New York's John F. Kennedy Airport and Boston Logan Airport.

"We would view the Blue Sky partnership between United and

JetBlue ( JBLU ) as best positioned to capture the (Spirit's) revenue

over time," TD Cowen analyst Tom Fitzgerald wrote in a note.

While Frontier Airlines has the most direct overlap with

Spirit and the most similar business model, we believe the Blue

Sky loyalty utility is likely to have the more appealing value

prop in markets like Fort Lauderdale, Orlando and Newark among

others, Fitzgerald added.

JetBlue ( JBLU ) moved quickly, offering $99 rescue fares for

stranded Spirit passengers and unveiling plans to sharply expand

at Spirit's largest hub, Fort Lauderdale-Hollywood International

Airport in Florida, with service to 11 new cities.

It expects to operate nearly 130 daily departures from Fort

Lauderdale this summer, marking the largest operation in the

airline's history from the airport - over 75% more daily flights

than in 2025.