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Frontier Airlines is once again seeking to merge with Spirit Airlines, following Spirit’s declaration of bankruptcy late last year. The proposed deal, as stated by Frontier’s parent company, Frontier Group Holdings Inc., aims to combine resources through newly issued Frontier debt and common stock.
According to The New York Times, this is not the first attempt by Frontier to join forces with Spirit. A similar bid was made in 2022 but was ultimately overshadowed by JetBlue’s $3.8 billion offer. However, the merger between JetBlue and Spirit encountered significant hurdles when the Justice Department filed a lawsuit to block the deal. Citing concerns that it would drive up prices for budget-conscious Spirit customers, a federal judge sided with the government in January, leading to the abandonment of the merger two months later. Spirit subsequently filed for Chapter 11 bankruptcy protection in November after negotiating terms with its bondholders. The airline has suffered financial losses exceeding $2.5 billion since 2020 and faces looming debt payments of over $1 billion in 2025 and 2026.
The bankruptcy filing came as Spirit, the largest U.S. budget airline, faced stiff competition from major airlines that have attracted many of its price-sensitive passengers with similarly low-cost offerings. The New York Times also reported that the market for U.S. leisure travel, which Spirit heavily relies on, saw declining fares last summer due to an influx of new flight options.
Read more: JetBlue and Spirit Airlines Call Off Merger Following Antitrust Setback
Despite these challenges, Frontier remains hopeful about the merger’s prospects. Bill Franke, Chair of Frontier Airlines, emphasized in a statement that the new proposal would create a more robust low-fare airline. “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 Franke. “We stand ready to continue discussions with Spirit and its financial stakeholders and believe that we can promptly reach agreement on a transaction,” he added.
Since submitting its offer, Frontier has engaged in discussions with Spirit’s board, management, and financial representatives, signaling that talks are ongoing. Whether these negotiations will lead to a successful merger remains uncertain, as Spirit continues to navigate its bankruptcy proceedings.
Source: The New York Times
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