Spirit Airlines Inc. shareholders should reject a pending takeover deal with Frontier Group Holdings Inc. as a signal to the board to engage more with rival suitor JetBlue Airways Corp. over its competing bid, a prominent shareholder-advisory firm said.

While both deals have inherent regulatory risks, the offer from JetBlue is superior from a financial standpoint, Institutional Shareholder Services Inc. said in a report Tuesday. Spirit rejected JetBlue’s $3.6 billion original offer this month, prompting it to launch a hostile $3.3 billion tender bid.

The report could give new life to JetBlue’s effort to capture growth it can’t otherwise attain, using a merger to create a more viable competitor to the nation’s four-largest carriers. It would also provide an infusion of aircraft orders and workers as the industry continues to struggle with staffing.

A JetBlue-Spirit merger would combine very different business models, adding extra complexity to a transaction. Spirit has previously said such a deal would face antitrust pushback, leading it to favor a deal with similarly focused Frontier, creating the largest US deep-discount carrier with bare-bones fares and fees for anything extra.

“JetBlue’s proposal arguably faces more complex regulatory headwinds,” the ISS report said, particularly given an existing federal antitrust lawsuit over a JetBlue and American Airlines Group Inc. partnership in the northeast US. “Nonetheless, there does not seem to be sufficient evidence at this time suggesting that its proposal to acquire Spirit has zero chance of receiving regulatory approval.”

Both transactions, ISS said, are likely to “face significant regulatory uncertainty.”

Spirit jumped 2.7% to $21.05 a share at 11:35 a.m. in New York trading, while JetBlue declined 1.3% and Frontier gained 1%.

Spirit’s board has backed Frontier’s $2.9 billion stock-and-cash bid and its shareholders will vote on the proposed combination on June 10. JetBlue has said it could revert back to its initial $3.6 billion offer if Spirit’s board resumes talks between the two.

‘Flawed Process’

“The ISS report highlights the flawed process that the conflicted Spirit board followed, which only underscores the need for Spirit’s board to now come to the table and negotiate,” JetBlue Chief Executive Officer Robin Hayes said in a statement. He urged Spirit shareholders to “send that strong message to their board by voting against the Frontier transaction.”

Spirit didn’t immediately comment on the report, while Frontier didn’t immediately respond to a request for comment.

JetBlue has said its offer isn’t subject to approval by its shareholders or to a financing contingency, and includes a $200 million “reverse breakup fee” payable to Spirit if a deal is blocked for antitrust reasons. Frontier’s proposal doesn’t include such a clause, which ISS said is “the only tool for providing some certainty of value for shareholders in the event of a regulatory rejection.”