Frontier Airlines’ attempt to buy rival Spirit Airlines failed yet again.
Spirit Airlines, which filed for Chapter 11 bankruptcy protection late last year, rejected another bid from the airline’s parent, Frontier Group Holdings, saying it would not provide sufficient value to the airline. Spirit also raised concerns over the deal’s potential to secure regulatory and court approvals, according to a Wednesday regulatory filing.
Under Frontier’s proposed deal submitted on Jan. 7, stakeholders would have acquired $400 million in debt and attain a 19% stake in Frontier after the merger. The deal would also have required certain stakeholders to go through a $350 million stock offering to help pay the company’s debt. The funds left over would go to the combined company’s balance sheet.
SPIRIT TERMINATES MERGER WITH FRONTIER AIRLINES
The parties involved “determined that the Proposal would deliver less in value to the Company’s stakeholders than what was contemplated by the Company’s existing Plan,” the regulatory filing said. “The Company continues to advance through its restructuring process, which will significantly deleverage the Company and position it for long-term success,” Spirit said in the filing.
The company, barring any new developments, will not delay its plans to emerge from Chapter 11 during the first quarter of 2025.
The carrier first filed for bankruptcy protection in November to reduce the company’s total debt and provide increased financial flexibility. Spirit’s multiple failed mergers – one with Frontier and another with JetBlue – left the ultra-low-cost carrier in a bind after repetitive quarterly losses.
SPIRIT AIRLINES PLANS TO SELL PLANES, CUT JOBS
The company reportedly attempted to reignite potential merger talks with Frontier Airlines last year, after the airline was outbid by JetBlue.
In 2022, Frontier and JetBlue had been in a monthslong bidding war for Spirit after Frontier Group Holdings and Spirit announced a definitive merger agreement. JetBlue won with its enticing bid worth $3.8 billion.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ULCC | FRONTIER GROUP HOLDINGS | 8.13 | +0.35 | +4.56% |
However, in January 2024, the deal with JetBlue was blocked by regulators over concerns that the deal would hurt the availability of low-cost air travel tickets.
Spirit announced plans last fall to sell multiple aircraft and lay off workers as it tried to raise cash and revive operations. It also said it identified approximately $80 million in annualized cost reductions that it plans to implement in 2025.
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