Spirit Airlines has once again declined a merger proposal from Frontier Airlines. Spirit stated that the latest offer, termed the ‘New Proposal,’ did not meet the approval of its stakeholders. The airline plans to continue with its standalone recapitalization strategy.
The New Proposal included an offer for Spirit’s stakeholders to receive $400 million in second-lien debt and 19% of Frontier’s common equity post-merger. However, it required a waiver of a $35 million termination fee related to a previous agreement. Spirit highlighted several concerns about the proposal, noting it would provide less value than their current reorganization plan and could lead to extended and costly Chapter 11 proceedings.
After reviewing the proposal with legal and financial advisors, Spirit submitted a counterproposal on February 7, seeking $600 million in debt and $1.185 billion in equity for its shareholders. This counterproposal was rejected by Frontier.
Spirit remains focused on completing its restructuring process, which aims to deleverage the company and position it for long-term success. A hearing to confirm Spirit’s reorganization plan is scheduled for February 13, 2025.
Frontier expressed disappointment over the rejection but emphasized their commitment to delivering value for their shareholders. They acknowledged that combining with Spirit could have created more value than Spirit’s standalone plan.
This recent development follows earlier discussions between the two airlines about a potential merger, which were initially reported last year by The Wall Street Journal. In 2022, JetBlue also showed interest in acquiring Spirit, leading to a bidding war that ended when regulatory authorities blocked JetBlue’s merger attempt.
Spirit has been navigating financial difficulties and filed for Chapter 11 bankruptcy as part of its efforts to restructure its finances.
