Welcome to Spirit Airlines call to discuss the board of directors decision to reject the tender offer by JetBlue Airways Corporation. After the speaker's prepared remarks, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. If you should need further assistance, please press star zero. I would now like to hand the conference over to your host today, Ms. DeAnne Gabel, Senior Director in Investor Relations.
Thank you, Christian, and thank you everyone for joining our call to discuss the Spirit board's decision to unanimously reject JetBlue's unsolicited tender offer. This call is being recorded and simultaneously webcast. A replay of this call will be archived on our website for 60 days. Presenting on today's call are Ted Christie, Spirit's Chief Executive Officer, and Andrew Finch, Co-Chair of the Antitrust Practice Group and a partner in the litigation department at Paul, Weiss, Rifkind, Wharton & Garrison LLP. Following our prepared remarks, there will be a question and answer session for analysts. In addition to the press release we issued on May 19th , we will also be referencing an investor presentation which is available on our website at ir.spirit.com and has been filed with the SEC.
Before we begin, I'd like to also remind everyone that today's discussion contains forward-looking statements that are based on the company's current expectations and are not a guarantee of future performance. There could be significant risks and uncertainties that could cause actual results to differ materially from those reflected by the forward-looking statements, including the risk factors discussed in our reports filed with the SEC and the consummation of the merger with Frontier Group Holdings pursuant to the merger agreement entered into on February 5th, 2022 . We would encourage everyone to read Spirit's definitive proxy statement filed with the SEC on May 11th, 2022, and mailed to stockholders as well as Spirit's Schedule 14D-9, filed with the SEC on May 19th, 2022 for more information.
The merger is expected to close in the second half of 2022 and is subject to satisfaction of customary closing conditions, including completion of the regulatory review process and approved by Spirit stockholders. We undertake no duty to update any forward-looking statements. With that, I turn the call over to Ted.
Thanks, Deanne, and thanks to all of you for joining us this afternoon to discuss our board's decision to unanimously reject JetBlue's unsolicited tender offer and reiterate our support for the merger agreement with Frontier Airlines. With me today is Andrew Finch, Co-Chair of the Antitrust Practice Group at leading law firm Paul, Weiss. Andrew, who previously served as the Principal Deputy Assistant Attorney General and is Acting Assistant Attorney General in the DOJ's Antitrust Division, has been one of our advisors in evaluating the antitrust risk of a JetBlue-Spirit combination. On Thursday, we issued a press release outlining the rationale for the board's decision, and this afternoon we filed a presentation with further information. First, I want to take you through the key facts about JetBlue's inferior offer. Then I'll let Andrew Finch make additional comments on the antitrust risk of JetBlue's proposal, and we'll wrap up with Q&A.
As you have heard us say consistently over the last few weeks, at the heart of the board's decision is the fact that JetBlue's offer is not reasonably capable of being consummated. JetBlue's regulatory case is weak and defies common sense. By their own admission, they expect the DOJ to sue to block the JetBlue acquisition. I have to wonder if JetBlue is purposely downplaying the substantial regulatory risk. It's inconceivable to us that an acquisition of Spirit by JetBlue gets approved unless they abandon the NEA, the anti-competitive alliance with American Airlines. JetBlue has demonstrated that preserving this alliance with American and not its acquisition of Spirit is its first prize. When we were engaged in discussions with JetBlue, we asked if they would abandon the NEA in order to get regulatory approval for a proposed transaction with Spirit. They refused.
If they think approval is so likely, why refuse to do whatever it takes to get the deal done? I'll let Andrew speak to his views in a few minutes. At the simplest level, a JetBlue transaction is about a high-fare carrier trying to buy a low-fare carrier, reducing capacity and raising fares. Common sense tells you that is not a favorable story for regulators. In my opinion, JetBlue knows it faces a low probability of approval, which is why it's shifting the risk on Spirit stockholders with inadequate compensation. What is JetBlue's motivation in all this? I believe it's a cynical attempt to disrupt our merger with Frontier because a Spirit-Frontier combination poses a competitive threat. Why else would JetBlue wait over seven weeks after we announced the Frontier deal to submit the acquisition proposal?
Why did JetBlue wait to launch the tender offer until just after we mailed our proxy statement for the Frontier merger? I don't think that timing is coincidental. Think about a world post-Spirit Frontier combination for JetBlue. They will have to compete with a ULCC carrier of larger size, scale, and reach, and against one of the lowest cost structures in the world. The ULCC fares are a fraction of JetBlue's. That is a daunting environment. In fact, in its 2021 10-K risk factors, JetBlue specifically calls out the Spirit-Frontier combination as a factor that may affect JetBlue's competitiveness. That may be an understatement. I think they're scared of the competition. As a result, I think JetBlue believes it's worth the $200 million reverse termination fee to disrupt our pending merger with Frontier. My message to Spirit stockholders is don't be distracted by JetBlue's tender offer.
It is a highly conditional offer, which still requires regulatory approval and contains a list of conditions that are solely for the benefit of JetBlue and cannot reasonably be expected to be met, including a walk away if the stock market declines more than 10%. JetBlue's cash offer is highly opportunistic. The supposed premium is based off highly depressed, pandemic-related, all-time-low stock price levels. I'd remind you that Spirit's stock price was higher than $30 for the entire five years before the pandemic. In fact, JetBlue's offer is even below Spirit's high trading price during the depths of COVID. The offer also excludes Spirit shareholders from participating in the upside from synergies and the industry recovery. Once the airline industry recovers to pre-pandemic levels, that alone is expected to deliver Spirit shareholders value well above JetBlue's offer.
This is why we negotiated for 48.5% ongoing ownership through the stock consideration in our Frontier merger. When you combine this with the $500 million of run rate operating synergies from the Frontier merger, Spirit stockholders have even greater potential upside, numbers that, by our calculation, dwarf either of JetBlue's offers. Before I turn it over to Andrew, I also want to touch on the misinformation that JetBlue continues to spread about our board and our process. The idea that our board refused to engage on JetBlue's proposal is total fiction. JetBlue's own tender offer document describes the extensive engagement we had with them, including direct contact between our CEOs.
To be clear, over a four-week period, we spent hundreds of hours and hundreds of thousands of dollars assessing the regulatory risk of an acquisition of Spirit by JetBlue, including assessing the validity and merits of JetBlue's own analysis. We shared projections with JetBlue's financial advisors and provided them access to documentary due diligence material through a secure virtual data room that offered information substantively consistent with what we shared with Frontier. This included our detailed five-year plan. We also participated in a two-hour due diligence call with JetBlue's management team to discuss financial model projections, fleet financing, labor, our new headquarters, and other material contract details. During our engagement with JetBlue's management team and advisors, they thanked us for our openness and transparency. As you can see, we engaged in good faith.
However, we did not meet their requests for highly competitively sensitive information, such as forecasts for the economics of every route that we fly or data on our largest and most profitable routes, which would be highly inappropriate to share with a competitor. We didn't provide this information to Frontier either. The reality is that JetBlue's offer is not superior to our merger agreement with Frontier, but JetBlue is so desperate to disrupt our combination with Frontier that they are willing to spread inaccurate statements and mischaracterizations to the public. I now will turn it over to Andrew for more detail on the regulatory risk.
Thank you, Ted. Given the antitrust issues at the heart of the Spirit board's decision, I want to briefly reiterate the very substantial regulatory hurdles that a JetBlue Spirit transaction would face. From my time in the DOJ's Antitrust Division, I can tell you that the facts do not support a favorable decision by regulators. In a JetBlue Spirit combination, the conversation would be centered around, one, raising ticket prices on Spirit routes to JetBlue levels and reducing capacity on aircraft by reconfiguring them to the JetBlue format with fewer seats. Two, removing approximately 50% of the ULCC capacity in the U.S. as a result of eliminating Spirit as the largest ULCC airline. Three, merging Spirit with what's essentially a combined JetBlue and American Airlines in the Northeast.
Four, trying to complete a second major transaction for JetBlue while it's in the midst of litigation with the DOJ seeking to block the NEA. When taken in combination, all these factors make regulatory approval of the JetBlue transaction essentially a non-starter. As it relates to the NEA, we consider JetBlue's view on potential litigation outcomes to be fundamentally mistaken. In our opinion, if JetBlue wins or settles the NEA litigation, the DOJ will be even more determined to stop an acquisition of Spirit as JetBlue will have just completed a de facto merger in the Northeast with American Airlines, which is the largest airline in the world.
On the other hand, if JetBlue loses the NEA litigation, JetBlue would likely appeal in a last-ditch effort to save the anti-competitive alliance that it has implied is more important to it than an acquisition of Spirit, and that could take well over a year to resolve. Even if we set aside the issue of the NEA, one thing that Spirit and JetBlue can agree on is that the DOJ would likely bring a lawsuit to block a JetBlue Spirit transaction. JetBlue cannot and hasn't denied that this is a likely outcome. That means that the overall review of a JetBlue Spirit transaction would likely take up to two years to be resolved. Now, JetBlue would have you believe that it's offering to divest all of Spirit's assets in New York City and Boston, and that that should be sufficient to address the regulatory issues, but that's simply not true.
The DOJ has been clear that it thinks the Northeast Alliance will not only eliminate important competition in these two cities, but will also harm air travelers across the country by significantly diminishing JetBlue's incentive to compete with American elsewhere. JetBlue has not articulated any concrete plan for addressing those concerns. Moreover, current DOJ leadership has expressed deep skepticism about the effectiveness of divestiture remedies and a preference for seeking to block transactions rather than accept divestiture-based settlements. All this is to say, we don't believe that a JetBlue transaction is likely to receive regulatory approval. Spirit's proposed merger with Frontier poses meaningfully less regulatory risk simply due to Frontier not having pending DOJ litigation and the potential to deliver more ULCC fares to more travelers in more markets.
That's totally unlike the JetBlue merger, which would eliminate the largest ULCC and result in capacity reductions and fare increases to consumers. With that, I'll turn it back to Ted.
Thanks, Andrew. Our board continues to unanimously recommend that Spirit stockholders vote for the merger proposal with Frontier on June 10th . Further, we recommend Spirit stockholders reject the JetBlue tender offer and do not tender any shares of Spirit to the offer. We are excited about the Frontier combination and the opportunities it brings to our guests, our Spirit family, and our stockholders. A vote for the Frontier merger is a vote to create America's most competitive ultra-low fare airline and to bring long-term superior value to Spirit stockholders. With that, I'll turn it back to DeAnne.
Thank you, Ted. Christian, we are ready to begin with the question and answer session. We ask that you limit yourself to one question with one follow-up. Time permitting, you are welcome to queue for additional questions.
Ladies and gentlemen, if you have a question at this time, please press star and then the number one key on your touchtone telephone. Again, that is star and then the number one. If you wish to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question is from Conor Cunningham from MKM Partners. Your line is open.
Hey, everyone. Thank you. There was a fair bit of talk about the math in the deck, so I'm just wanting to talk a little bit more about that. Did you look into if JetBlue was gonna be successful in all this, they're gonna retrofit your entire fleet. Have you just figured out how much that may cost them to get all together as well? I mean, that seems to be something that's been lost in this whole discussion as well, outside of what's, you know, going on in the press and Whatnot.
Hey, Conor, it's Ted. No, we haven't. We're not aware of what JetBlue's costs are to reconfigure. I don't anticipate that they are insignificant, however, understanding what their product is on board, but I think that's a matter for JetBlue shareholders. I think what's critical is that the reconfiguration results in the removal of seats from our airplanes, which we estimate could be as much as 20%, which is a significant reduction in capacity.
Right. Then within those discussions that you've had with them, was there ever a discussion about keeping, like, maintaining two separate brands? I mean, I realize you have a lot of issues with NEA, but assuming that was to not be an issue, like that's potentially a path forward. Just curious if you have any thoughts on the two separate brand idea in general.
That was not discussed as an idea. I think upfront, JetBlue was clear that they intended to do exactly what they've described, which is to migrate our product to the JetBlue product, which we viewed as extremely problematic from a regulatory narrative perspective. You're taking seats out and raising fares. That's not a pro-consumer, pro-competitive argument. But I think I would say running two brands is also a very difficult thing to do. We've seen that in the history of the aviation industry. It's a very difficult thing to do. Look, you know, I mean, there's been a lot of narrative around this. I've heard from them in their presentations why didn't we reach out to them and talk to them about this?
Well, we didn't contact United, American, Delta, and Southwest either, because they're all higher fare, higher cost airlines. Our objective was to try to find something that could actually deliver value to our stockholders, which we believe we did. We've had numerous conversations with a number of airlines over the years, both national and international, about ideas, and have focused on the Frontier deal as being the best answer.
Great. Thank you.
Your next question is from Helane Becker from Cowen. Your line is open.
Thanks very much, operator. Hi, everybody, and thank you very much for the time. Have you talked to Frontier about adjusting either the cash portion or the equity portion since the stocks are down so much since the February 7 date?
Hey, Helane, it's Ted. So how are ya? The truth is we negotiated hard with Frontier on the deal that we landed on. At the time of our negotiation, they actually had a superior market cap, and yet we landed in a position to be able to deliver greater than 51% of the economics to our shareholders, and in doing so, preserving all the upside. In a stock for stock deal, we thought that was critical during this time frame when we're at ultra-depressed levels, which is proving to be very smart from our perspective, we think.
You know, right now where we sit is had there been a superior offer from an alternate party, then no doubt it would have made sense for us to engage to discuss the possibility of additional changes from Frontier. But as we've outlined numerous times over the past few weeks, it stretches the imagination to come up with a way that you could describe JetBlue as superior when their proposal is not able to be consummated.
Got it. That makes sense. That makes perfect sense. Just a follow-up question. I think you guys said that you have an agreement with your flight attendants. Maybe it was Frontier who has the agreement with the flight attendants, but what about other labor groups?
Yeah, I believe Frontier announced that they had reached a transition agreement with the AFA National, which represents both the Frontier and Spirit flight attendants. I think that is in place, and I know that AFA has voiced their support for the Frontier Spirit transaction. As it relates to the rest of our labor groups, there's nothing specific to comment on right now, other than the fact that it is also true that our pilots are both represented by the same union. I think there is protocol in place for the way those things would work between Spirit pilots and Frontier pilots.
That's great. Thanks, Ted.
Sure.
Your next question is from Savanthi Syth from Raymond James. Your line is open.
Hey, thanks. Good afternoon. I was kind of curious, what kind of response you have got from your shareholder conversations and generally, you know, what the next steps here are leading up to the June 10th vote?
Well, hey, Savi. I would say that we've been excited by their interest, obviously. There's quite a bit of effort that we would have intended to put in regardless of JetBlue's entry into this discussion to educate our shareholders on the value of the Frontier transaction to make sure that we're illustrating that well, and that the proxy advisory services have the full story, which is partially enhanced by the deck we just released this afternoon. I think, you know, they've shown significant interest obviously in it because, you know, this is a very interesting discussion right now.
I think what's important to lay out is that the vote that we will be soliciting from our shareholders on the tenth is a vote for the Frontier merger, which in all cases is superior to standalone Spirit. That vote has nothing to do with a JetBlue proposal. Our board has already rejected that, and it's illusory.
Yes, I get that, absolutely. Ted, if I might ask, so in the off chance that the vote comes in no for the merger, what would the next steps be?
Well, we obviously don't think that that's likely. In that scenario, we would revert to standalone.
Okay. There's no kind of opportunity or I guess it would be on Frontier's kind of accord to see if they wanna come back again.
Sure. It's, you know, any discussion could be had between us and them or them and us and any other party. Again, those discussions have been had numerous times over the years.
Sure.
We arrived at this answer as the best possible answer for our shareholders.
Makes sense. I appreciate the call.
Sure.
Your next question is from Mike Linenberg, from Deutsche Bank. Your line is open.
Oh, yeah. Hey, guys. Thanks for doing this call, everyone. Ted, I just want to go back to your point where you said you thought a no was unlikely. Is that just based on kind of how you feel about the strength of your proposal, or is that just based on conversations that you've had with Spirit shareholders over the last week or so? Is that kind of where the running is right now, that the majority are in favor?
No, I'd hesitate to put, you know, any speculation as to how individual shareholders intend to vote.
Okay.
I do.
Just my second question. Andrew, you laid out the regulatory risks for JetBlue, Spirit. What are the potential regulatory risks for Frontier, Spirit? I guess I'm asking this in light of, you know, last year's executive order where, you know, all airline mergers are gonna be scrutinized. You know, what are the potential, you know, points of contention as you see them? Thank you.
Thanks, Mike. Look, we think that there will be regulatory scrutiny of a Frontier deal.
Mm-hmm.
We actually think there's a strong case for approval because the transaction will create a disruptive nationwide ULCC competitor for the first time, combining largely complementary routes. That combined ULCC will be a robust alternative to the big four. Consistent with what you asked about, including the executive order and recent speeches from the Antitrust Division officials, it'll actually increase rivalry and enhance the competitive process. The result will be more flights to more destinations with more ULCC fares, and that'll allow more people to fly who wouldn't otherwise be able to afford to do so. It's gonna be a market structure that's better for society and really have a democratizing influence.
I think that, you know, while they'll look at it carefully, I think that they'll come to the conclusion, I hope, that this is gonna be a transaction that will enable enhanced competition and enable the combined firm to actually push back against the legacies and their fortress hubs by penetrating at a greater scale and have an improved ability to withstand their aggressive responses from those incumbent carriers.
Andrew D., thanks for that. I just have one quick sort of follow-up. I've seen some reports that talk about the overlap. I mean, I realize on paper you sort of think, okay, complementary, but, you know, when you go sort of city pair or airport pair, there is a decent amount of overlap. Are you prepared to potentially offer up either some form of remedy package if the DOJ requests it, and/or, you know, is there a reverse breakup fee in the offing because of some of the, you know, some of those potential regulatory issues?
Yeah. You know, it's interesting, Mike. A lot of JetBlue's rhetoric about overlaps just isn't relevant and reflects a misconception on JetBlue's part.
Mm-hmm.
For one thing, JetBlue ignores that there's substantial competition from the legacies and others on the vast majority of those routes. In fact, when frequencies are taken into account, i.e., at least sort of like daily flights, the overlaps between the two deals are basically identical.
Mm-hmm.
Critically, the Frontier-Spirit deal has fewer 2-to-1 and 3-to-2 overlaps than the JetBlue deal would.
Mm-hmm.
On top of that, with the Frontier deal, the vast majority of the overlaps involve Orlando and Las Vegas routes, and they don't involve restricted airports. Lastly, you know, it bears emphasis that there are no overlaps on 89% of the Spirit-Frontier, you know, in the broader Spirit-Frontier network, when you're looking at daily nonstop service. You know, look, I think that in, you know, ultimately the differences in competitively sensitive overlaps are minor and will have little or no impact on DOJ decision making.
Oh, great. Thanks for that. Really appreciate it.
Mm-hmm.
Mike, I might just jump in with just one other point, 'cause it has been one that's been discussed, is this idea of overlap. I think it's missing. I think all the points Andrew made are correct, but I think it's also missing the point that this is really about a higher fare airline buying a lower fare airline. Even if you're willing to accept that there may be greater overlap one way or the other, we have less overlap with Delta today than we do with JetBlue.
Mm-hmm.
I don't think we're approaching Delta for an acquisition, right? So
Yeah. Sorry.
It's sort of a silly way to look at things is that narrow a box. What we're really talking about is high fare airline, low fare airline, anti-competitive alliance with American, one of the big three. Again, it's unusual to me that would be perceived as possibly clearable by the DOJ. Okay. Thanks, everyone.
Your next question is from Daniel McKenzie from Seaport Global. Your line is open.
Hey, thanks, guys. You know, thanks for the presentation. You know, I can understand the rationale, pardon me, for a national ULCC, you know, the rival something that Europe currently has. I get that. If you permit me just to play devil's advocate for a moment, if the DOJ was going to reject a Frontier-Spirit transaction, is the expectation for that timeframe for a decision one way or the other, the same, so perhaps sometime this fall? Is there any feedback that you can share that you're getting so far?
Andrew, you wanna provide any insight before I jump in?
Sure. All I'll say is that at this point, you know, it's hard to predict whether or not it'll be this fall or sometime next year. Obviously we're in the process. As has been reported, we're in the process of engaging with the Department of Justice right now, and don't have any particular feedback that I can share at this stage. We're in the early stages of doing that.
I guess, you know, second question here, slide 29, you know, you've put together some, you know, stock price potential outcomes, you know, just based on consensus estimates. I'm wondering if you'd be willing to drill into that, you know, somewhat. What insights can you share about things the Street might be missing about this transaction or overlooking, you know, from the, you know, just, you know, from where you guys sit, whether it be growth or what have you?
Sure, Dan. Yeah, I think also we reference it on both slides 13 and 14 of the presentation, and in those, we actually use Street consensus. While there, well, you know, it is public that management view may be higher than the street, rather than debate it in the public, we just decided to use street consensus. At those numbers, even assuming more lower than average PEs, we're in all cases delivering value in excess of the JetBlue offer, reminding everyone that the JetBlue offer, if it were to survive a DOJ lawsuit, is two years or more down the road. We're talking about delivery in the window of 2023 and 2024, which is when we expect a more return to normalcy.
That's the way the street projects, the Spirit return to normalcy and the Frontier return to normalcy. We actually believe that we'll be able to return much more quickly and more robustly than that. We've outlined those reasons to you guys on our earnings call about the power of lower costs and being able to stimulate more travel and the fuel advantage that we enjoy as a result of being younger fleet with more NEOs, which clearly is not yet factored in. I think that that's incremental upside to what is already a superior idea at standalone versus the JetBlue proposal. Much less when you take into account the combination which drives incremental utilization, which drives efficiencies and synergies at the op level, and delivers $1 billion in consumer savings.
Mm-hmm. Okay. Yeah, that's terrific. Thanks, Ted.
Again, as a reminder, that is star and then the number one on your telephone to ask a question. Again, that is star one. We'll pause for just a moment to see if more questions come in. Your next question is from Jamie Baker from JP Morgan. Your line is open.
Thanks for taking the question. This is James on for Jamie. Just one for me and just more on the topical theme of pilot shortage. Just wondering if more consideration, if any, you have taken that into both potential transactions here, and what current messaging is to Spirit pilots.
Sure. Yeah. We talked about it on our earnings call that while there is, you know, an uptick in attrition across the industry as pilots kind of are in demand at the major airlines. We have adjusted to that by increasing the size of our schoolhouse, and we're still seeing plenty of applications at Spirit, so right now not facing any immediate issue. But I think what the Frontier transaction does is actually enhance the value to Spirit pilots and Frontier pilots for that matter, for a number of reasons. One is, it'll be a much bigger, more stable airline. At that point, it will be, in all likelihood, the fifth-largest airline in the United States. That means that there's more career opportunity and career stability.
There's greater number of bases for pilots and flight attendants to choose to live at. We believe that will create a higher quality of life for our pilots, giving them more options and that sort of thing. There's reasons actually I believe our pilots feel this way for you to be bullish about the combination because it does create incremental value for them and more opportunity. I know that's true because I've been out on the line talking to them. That's another reason that we think that it's a positive deal for our team because it does create incremental opportunity.
What the JetBlue transaction would do for our pilots and flight attendants is right now beyond me because we haven't spent any time with it. I can tell you that the Frontier deal is very positive.
Got it. I appreciate you letting me squeeze in a question there.
Again, that is star one on your telephone to ask a question. Your next question is from David Vernon from Bernstein. Your line is open.
Hey there. Thanks for taking the question. Ted, if we accept the proposition that the deal is illusory with JetBlue, even if you went down that path and ended up two years from now, do you still think Frontier would be there as a possible deal? If you could talk a little bit about maybe, you know, what you guys have done to try to get JetBlue to come closer on terms or structure that would maybe kind of mitigate some of that risk of holding out for the higher price.
Okay. Well, as to the first question, setting aside whether or not it would be wise for any board to proceed on a transaction that they viewed had very limited probability of execution, and subjects the company to substantial risk because they're staring at a bird in the hand today with a transaction with Frontier that creates tremendous value. So the theory that you're asking us to walk down is we would, in theory, reject that transaction for something that we view today as illusory, and take two years of business risk over a time that we think weakens Spirit, because we are the acquisition target. In most cases, as history has proven out, targets in that case get weaker over that period of time.
In fact, I've seen data suggest that they usually trade down 25% or more over that window of time, especially if there is no transaction consummated. The reward from all of that is $200 million two years down the road. Strikes me as not being an extremely valuable idea to our shareholders. To your second point, we did actually proactively engage with JetBlue early on in the discussions to let them know about the things that we thought they needed to think about and to resolve as it related to the regulatory hurdles.
I think, you know, that's outlined in our response, but we asked them to commit that they would abandon the NEA and they would do anything in their power to get regulatory approval and that they would need to commit to a much more substantial reverse termination fee than the one they proposed because the risk was so high. Even with all that, we viewed it as a very difficult story to tell, which we've outlined on this call. Nonetheless, we did say those are the things that we think are sort of minimum operating equipment to get us to a discussion, and they rejected all of those.
All right. I appreciate that. I was just trying to think about from the perspective of letting the regulator kind of make the decision as opposed to making the decision for what the regulator would do. That's the way the question was posed to me, so I appreciate you taking the time to answer.
Sure.
All right. Showing no further questions at this time, this now concludes the call. Thank you.
Thank you everyone for joining us.