As low-cost airlines struggle, Frontier Airlines is making a second attempt to merge with the now-defunct Spirit Airlines, which filed for bankruptcy late last year.
The parent company of Frontier Airlines, Frontier Group Holdings Inc., announced on Wednesday that freshly issued Frontier debt and common shares will be part of the proposed transaction.
In 2022, Frontier attempted to merge with Spirit, but JetBlue outbid them. However, a federal judge decided in January to halt the $3.8 billion JetBlue acquisition after the Justice Department sought to do so, claiming it would increase prices for Spirit passengers who rely on cheap fares. Two months later, Spirit and JetBlue canceled their merger offer.
In November, Spirit filed for bankruptcy protection. After negotiating deals with bondholders, Spirit, the largest low-cost airline in the United States, filed for Chapter 11 bankruptcy. Since the beginning of 2020, the airline has lost over $2.5 billion, and in 2025 and 2026, it will have to make debt payments totaling over $1 billion.
By providing their own line of basic tickets, the largest American airlines have managed to attract some of Spirit’s cost-conscious clientele. Additionally, Spirit’s main business, leisure travel in the United States, saw a decline in rates this past summer due to an excess of new flights.
Frontier is hopeful that it can reach an agreement this time.
According to a statement from Frontier Chair Bill Franke, this proposal represents a compelling opportunity that will yield greater value than Spirit’s standalone strategy by building a stronger low-cost airline with the long-term viability to compete more successfully and enter new markets at scale. We think we can quickly come to an agreement on a deal and are prepared to continue talking with Spirit and its financial stakeholders.
According to Frontier, it has spoken with Spirit’s board members, management team, and financial stakeholders since submitting their bid.
Spirit stated in a regulatory filing that it had received a proposal from Frontier earlier this month and, upon reviewing it, concluded that its current plan would benefit its shareholders more. It stated that it would proceed with its own preparations to leave Chapter 11 bankruptcy protection, unless there were any new developments.
Frontier Group’s stock increased 6% on Wednesday.
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The Associated Press
