DBEA55AED16C0C92252A6554BC1553B2 Clicky DBEA55AED16C0C92252A6554BC1553B2 Clicky
February 16, 2025
Frontier, Spirit
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Frontier Airlines is once again looking at a merger with Spirit Airlines, as we reported late last year.  There is considerable history between the two carriers.  In 2022, the carrier reached an agreement to acquire Spirit, but was outbid by JetBlue.  However, the JetBlue merger was rejected as the U.S. Justice Department blocked the merger on competitive issues.  The result was Spirit standing alone, in an untenable position resulting in a Chapter 11 bankruptcy filing.  

The Latest Bid

Frontier has made a new bid for Spirit, which was immediately rejected by management, who are looking to soon exit their pre-planned Chapter 11 bankruptcy.  Spirit’s CEO Ted Christie said that the proposal was “inadequate and unactionable.”  The company today filed documentation with the SEC outlining the merger proposal.  Given Frontier’s persistent interest, we don’t expect this to be the final attempt at a merger.

Despite the rejection, there are a number of reasons that a merger of these two carriers makes sense.  First, they have similar fleets of new Airbus A320neo family aircraft.  Second, they have only a handful of overlapping routes, which could easily be remedied for anti-trust considerations.  

Third, both operate with a similar ULCC business model and each is introducing similar innovative revenue enhancing service to better compete with major airlines.  Fourth, there would be significant synergies between the two carriers, with the critical mass to better compete on a national rather than regional basis.  Fifth, both carriers have had financial difficulties, and capturing synergies would improve their profitability and competitiveness.  Sixth, this would enhance competition by maintaining a viable player in the ULCC market for consumers to better compete with major carriers.

The Bottom Line

What happens next?  We would expect both companies to continue to look at the merger process, and perhaps a sweetened offer from Frontier.  Clearly Frontier has interest in merging, while Spirit may be gun-shy from going through another acquisition process, particularly given the results of the JetBlue attempt.  Stay tuned.

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Ernest Arvai
President AirInsight Group LLC

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