Spirit Airlines Inc.’s board unanimously rejected JetBlue Airways Corp.’s unsolicited $3.6 billion takeover bid over concerns it wouldn’t be consummated, saying it would instead stick with a lower offer from Frontier Group Holdings Inc.

“The JetBlue proposal involves an unacceptable level of closing risk,” Spirit Chairman Mac Gardner said in a letter to JetBlue released Monday. “Spirit continues to believe in the strategic rationale of the proposed merger with Frontier and is confident that it represents the best opportunity to maximize long-term shareholder value.”

The decision keeps Spirit and Frontier on a path to create the nation’s largest deep discounter—carriers that charge fees for everything beyond a low, bare-bones ticket—at a time of rebounding domestic leisure travel. Spirit had accepted Frontier’s $2.9 billion cash-and-stock offer earlier this year before JetBlue stepped in last month with a bid that raised questions over possible antitrust pushback.

The move stymies JetBlue’s best shot at near-term growth. While the carrier didn’t increase its $33-a-share cash offer, it revealed a sweetened offer on Monday with pledges to divest assets and include a $200 million reverse breakup fee. The plan aims to reduce risk of regulatory resistance while protecting an existing alliance in the northeast U.S. with American Airlines Group Inc.

Spirit shares tumbled 8% at 9:49 a.m. in New York, the biggest intraday decline in almost two months. JetBlue rose less than 1% and Frontier fell 3.4%.

‘Better Off’

In its latest proposal, reviewed by Spirit’s board in recent days, JetBlue offered to divest all Spirit assets in New York and Boston if needed to avoid gaining greater market share in those cities, the carrier said in a separate statement. It also could surrender gates and assets at other airports, including Fort Lauderdale, Florida, where JetBlue and Spirit both have a large presence.

“We have confidence that we can complete this transaction,” JetBlue Chief Executive Officer Robin Hayes said in the statement. “Spirit shareholders would be better off with the certainty of our substantial cash premium, regulatory commitments and reverse breakup fee protection.”

The Northeast Alliance between JetBlue and American already is the focus of a lawsuit by federal antitrust enforcers who say it gives the pair too much market concentration in Boston and New York. Speculation has grown that the U.S. Justice Department might not allow JetBlue to combine with Spirit and also keep the American alliance.

Frontier didn’t immediately respond to a request for comment.