Spirit Airlines Inc. stood by a takeover bid from Frontier Group Holdings Inc. even after rival suitor JetBlue Airways Corp. further sweetened its offer in the final days before a crucial shareholder vote.

The revised JetBlue proposal, which includes a higher breakup fee and larger upfront payment, won the backing of Spirit investor TIG Advisors LLC Tuesday. Proxy adviser Institutional Shareholder Services Inc. acknowledged the improved terms without changing its earlier recommendation in favor of the Frontier deal.

The flurry of developments showed how battle lines are hardening ahead of a vote Thursday that should determine which of the two carriers will move ahead with a Spirit merger. The late-stage bidding war sent Spirit’s shares up 1.9% at 11:16 a.m. Tuesday in New York. Frontier climbed 3.2% and JetBlue gained 1.7%.

JetBlue and Frontier are seeking to woo shareholders in the pursuit of Spirit, a deep discounter with low fares and fees for anything extra. The would-be buyers covet Spirit for the growth and competitive strength they could quickly gain through an acquisition. The US industry is dominated by four major carriers, and the victor in the war for Spirit would be ranked fifth, based on domestic passenger traffic.

The newest JetBlue proposal includes an accelerated prepayment of $2.50 a share, structured as a cash dividend to shareholders after approval of the terms. That’s up from $1.50 a share in a prior offer. JetBlue said it also increased its breakup fee to $400 million from $350 million, to be paid if antitrust regulators block the combination.

JetBlue’s revised bid, revealed late Monday, includes a so-called ticking fee mechanism as well, which could boost the overall value of the offer to $34.15 a share, or $3.7 billion. The pledges—marking the fifth revision for JetBlue in its effort to secure a deal—come a week after the carrier increased its bid to $33.50 a share.

Regulatory Review

“Whether it’s the Frontier deal or the JetBlue deal, shareholders are going to have to be patient as we go through regulatory approval,” JetBlue Chief Executive Officer Robin Hayes said in an interview. The latest changes to JetBlue’s offer give shareholders an earlier payoff, he said.

The changes did not address Spirit’s primary concern that the proposed tie-up won’t pass a federal regulatory review, Spirit said in a statement, and remains “substantially below” Frontier’s projections that shares of a combined company could reach $50. Spirit’s board has rejected JetBlue’s offers repeatedly.

Frontier said in a separate statement that JetBlue would remove capacity from the market and hike fares, making it unlikely to pass antitrust muster.

“A Spirit acquisition by JetBlue would lead to a dead end—a fact that no amount of money, bluster or misdirection will change,” Frontier said. “JetBlue’s proposal lacks any realistic likelihood of obtaining regulatory approval.”

Frontier on Friday boosted the cash portion of its bid to $4.13 a share—up about $2 from its original bid—along with 1.9126 share of its stock for each of Spirit’s. Those terms valued the airline at about $2.6 billion based on the closing price that day. Spirit shareholders would receive $2.22 a share as a cash dividend once the transaction is approved. Frontier also raised its proposed breakup fee to $350 million.

Frontier agreed in February to acquire Spirit in a cash-and-stock deal valued at $2.9 billion at that time. JetBlue challenged the merger with an unsolicited proposal two months later, kicking off the bidding war.

‘More Favorable’

ISS, the proxy adviser, declined to change its recommendation in support of the Frontier deal in the final days before a vote. But it found the increased breakup fee and higher prepayment in JetBlue’s latest offer “are now more favorable for Spirit shareholders” than the Frontier bid, and the ticking fee provides more of an offset to the risk of regulatory rejection.

TIG, meanwhile, said in a letter to Spirit’s board that it would vote against Frontier’s proposal and the airline should instead pursue a deal with JetBlue, calling it “far superior.” The investor said both deals likely face “rigorous” antitrust reviews, so shareholders would be better off going with the proposal that compensates them during the process.