By 
Frontier Airlines will pay Spirit Airlines Inc. a $250 million breakup fee if regulators block a merger between the two carriers, under a new agreement by the companies Thursday.
The move comes as Spirit
SAVE,
+3.99%
tries to win investor support for its merger with Frontier
ULCC,
+0.59%
and fend off a hostile bid from rival JetBlue Airways Corp.
JBLU,
+2.83%.
It also addresses a concern raised this week by Institutional Shareholder Services Inc., a proxy advisory firm that cited the lack of such a breakup fee as a key reason for its recommendation that Spirit investors vote against the Frontier deal.
JetBlue, which swooped in with a surprise offer for Spirit in April, after its deal with Frontier had been announced, has promised to pay $200 million if regulators were to block a JetBlue-Spirit deal.
Spirit executives said Thursday that they believe the additional fee should make the decision easier for shareholders, who are scheduled to vote on the Frontier merger next week.
An expanded version of this report appears on WSJ.com.
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