Spirit Airlines has once again turned down an acquisition proposal from Frontier Airlines, opting to continue with its own restructuring plan despite being in bankruptcy. Spirit rejected the offer, citing that it would “deliver less in value to the Company’s stakeholders than contemplated by the Company’s existing plan of reorganization.” In contrast, Frontier argues that a merger would have created more value than Spirit’s standalone plan.
The history of potential mergers between these two ultra-low-cost carriers dates back to 2022. At that time, a merger could have formed the fifth-largest airline in the United States, challenging major players like American Airlines and Delta Air Lines. The initial offer involved a $2.9 billion deal where Frontier stakeholders would hold a 51.5% stake and Spirit 48.5%. However, JetBlue’s competing bid complicated matters.
JetBlue offered $3.6 billion for Spirit but faced opposition from Spirit’s Board of Directors who favored Frontier’s proposal as “the most financially and strategically compelling path forward.” Despite improved offers from both sides, regulatory concerns led to the eventual termination of both merger attempts.
Spirit has experienced significant financial losses since 2020 and faces heavy debt repayments soon. Nevertheless, it filed for Chapter 11 protection last November and is pursuing a reorganization plan aimed at reducing debt and improving efficiency. This plan includes commitments worth $350 million in equity investment from bondholders and aims to cut $795 million out of its debts.
Frontier made another attempt to merge with Spirit in 2023 but withdrew its offer after Spirit declared bankruptcy. A renewed offer was also rejected by Spirit CEO Ted Christie as “woefully insufficient.” Meanwhile, Frontier CEO Barry Biffle claims their proposal “offers more value than Spirit’s stand-alone plan.”
Despite potential benefits such as fleet optimization and network expansion through consolidation, regulatory hurdles remain significant obstacles for any future merger attempts between these airlines.
