Frontier confirmed the latest merger discussion in a news release on Wednesday, Jan. 29. Spirit also confirmed the talks in a regulatory filing on the same day.
The deal first proposed on Tuesday, Jan. 7, offered $400 million in debt and a 19-percent stake in Frontier to Spirit shareholders. Frontier argued the merger would create a stronger low-cost airline while providing more value than Spirit's existing Chapter 11 bankruptcy restructuring plan.
Spirit CEO Ted Christie rejected the offer outright, calling it "woefully insufficient financially."
"Our board has concluded that continuing to delay our confirmation and emergence process carries too many risks for the company and its stakeholders and would be irresponsible," Christie wrote in a letter to Frontier on Tuesday, Jan. 28.
Spirit’s board determined the deal "would deliver less in value to the company's stakeholders" than its current restructuring plan, which is designed to reduce $795 million in debt and bring in $350 million in new capital. Spirit filed for bankruptcy in November 2024 and has said it expects to emerge from Chapter 11 in early 2025.
Frontier said combining the two budget airlines would strengthen competition, expand route networks, and improve financial stability.
"This proposal reflects a compelling opportunity that will result in more value than Spirit's standalone plan by creating a stronger low fare airline with the long-term viability to compete more effectively and enter new markets at scale," said Frontier's board chair Bill Franke. "We stand ready to continue discussions with Spirit and its financial stakeholders and believe that we can promptly reach agreement on a transaction."
But Spirit remains unconvinced.
The airline headquartered in Dania Beach, Florida, has spent months cutting costs and downsizing to stay afloat. Spirit furloughed pilots and laid off about 200 employees, part of an effort to reduce operating costs by $80 million annually.
Since making its bid, Frontier has held talks with Spirit’s board and financial stakeholders, arguing that Spirit's bankruptcy plan will leave it burdened with debt and unlikely to succeed. Spirit rejected the claim, instead doubling down on its independent restructuring strategy.
The merger offer came days after Frontier was fined $650,000 because federal regulators said the Denver-based airline illegally operated multiple chronically delayed flights, causing significant problems for travelers. Half of the the fine may be suspended if Frontier avoids further violations over the next three years.
The proposal marks the latest chapter in several years of discussions between the two carriers. In 2022, Spirit shareholders rejected an earlier $2.7 billion merger deal with Frontier in favor of a higher offer from JetBlue, which later collapsed due to antitrust concerns, CNN reported.
Spirit's regulatory filing from January 29 also revealed the two airlines discussed a possible merger in the summer and fall of 2024.
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