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A few weeks back, I wrote about Frontier Group Holdings, Inc. announcing that it was once again attempting to acquire Spirit Airlines. It filed a Form 8-K with its intentions around a proposed merger with the Securities and Exchange Commission only this morning. Spirit fired back and rejected the offer. On February 4th, Frontier submitted a new proposal, but this has also been rejected by Spirit today.
Frontier’s latest bid was reviewed by Spirit and a counter was presented on February 7th. Frontier rejected the latest offer (Spirit made on February 10th) as it was a bit too rich for its blood and would have required Frontier to cough up the aggregate value of the debt ($600 million) and equity ($1.185 billion) to be provided to Spirit stakeholders. Frontier had offered $400 million principal amount of second-lien debt issued by Frontier and 19.0% of Frontier’s common equity following the proposed combination. This was $50 million more than the last bid, but still a no go.
This is far from the first time that Frontier has made a move to acquire Spirit. It first announced plans to merge with the airline back in February 2022. The goal was to create a larger, low-cost carrier that could better compete against American, Delta, Southwest, and United. JetBlue countered with a $3.8 billion deal to acquire Spirit. That deal was terminated in March 2024 after the Department of Justice (DOJ) won its case to block the merger in January 2024.
The latest deal would have created the fifth largest airline in the United States. It would have also brought synergies from merging the loyalty programs, which would be boosted by credit card revenue, and cost savings from aligning across airport infrastructure.
Spirit wants to go it alone and thinks that it can navigate its restructuring under the Chapter 11 bankruptcy claim it filed. It has reassured passengers that their tickets, points, and all other aspects of traveling with the low-cost carrier will remain the same and that employees, vendors, aircraft lessors, and holders of secured aircraft indebtedness will also see business as usual. I’ve asked this before, and I’ll ask again, how long does Spirit think it can maintain its operations?
Low-cost carriers and Spirit in particular have had a rough time the past few years as full-service airlines thrived and broke all sorts of records. Passengers shifted to want more premium experiences. This coupled with higher labor costs and issues around aircraft delivery have all contributed to the current state. Spirit, Frontier, and JetBlue are pivoting to add premium cabins and amenities, but it’s likely too late for them to make it on their own. Combined, the two would have a better shot as the fifth largest in the United States.
Anthony’s Take: I think that in the end, Spirit is likely going to have to merge or go out of business. I still don’t love the idea of Frontier running the combined airline as there is a lot I like about Spirit from a passenger perspective that I think falls short with Frontier. We’ll see who makes the next volley.
(Image Credits: Frontier Airlines and Spirit Airlines.)
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Advertiser & Editorial Disclosure: The Bulkhead Seat earns an affiliate commission for anyone approved through the links above This compensation may impact how and where links appear on this site. We work to provide the best publicly available offers to our readers. We frequently update them, but this site does not include all available offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
1 comment
Cranky wrote about this last week I believe and said that Frontier’s most recent offer was insultingly low. I can see how Frontier would rather get Spirit on the cheap but sometimes you have to pony up a little more to make an offer viable.