February 16, 2025
Frontier Makes a Second Bid for Spirit Airlines Acquisition

Frontier Makes a Second Bid for Spirit Airlines Acquisition

Following a failed proposal in 2022, Frontier Airlines has made a second bid for a merger with low-cost carrier Spirit Airlines.
Parked Spirit Airlines aircraft.
Photo Credit: Spirit Airlines

In a move that could reshape the budget airline landscape, Frontier Airlines has made a second bid to acquire its rival, Spirit Airlines.

This comes after a previous attempt to merge in 2022 was thwarted by JetBlue Airways’ higher offer, a deal that was ultimately blocked by the Justice Department.  

Frontier’s latest proposal involves issuing debt and common stock, valuing the deal at an estimated $2.16 billion.

The airline argues that this merger would create a stronger, more competitive entity. capable of expanding into new markets and offering lower fares to consumers.  

A History of Struggles and Regulatory Scrutiny


In 2022, Frontier and Spirit first discussed a potential merger. The aim was to create a dominant player in the ultra-low-cost carrier (ULCC) segment.

However, JetBlue Airways swooped in with a higher offer, igniting a bidding war. The Justice Department intervened, arguing that the JetBlue-Spirit merger would stifle competition and lead to higher airfares for consumers. The courts ultimately sided with the government, forcing JetBlue to abandon the deal.

This setback, coupled with increasing competition and the lingering effects of the pandemic, pushed Spirit Airlines into financial distress.

The airline filed for Chapter 11 bankruptcy in November 2024, seeking to restructure its debt and improve its financial standing. This bankruptcy filing has opened a window of opportunity for Frontier to renew its pursuit of a merger.

Frontier’s Latest Bid


Frontier’s latest proposal involves issuing debt and common stock, valuing the deal at an estimated $2.16 billion.

The airline argues that this merger would create a stronger, more competitive entity. It would be capable of expanding into new markets and offering lower fares to consumers.

Frontier believes that a combined entity would have greater bargaining power with suppliers. This would ultimately lead to cost savings that could be passed on to passengers.

Frontier Airlines is a major American ultra-low-cost carrier (ULCC) headquartered in Denver, Colorado. Founded in 1994, Frontier operates a significant network of domestic and international flights. It serves over 120 destinations across the United States, the Caribbean, Mexico, and Central America.  

Frontier is known for its low base fares, but like many ULCCs, it generates revenue through a variety of ancillary fees for services such as baggage, seat selection, and even carry-on items.

The airline has experienced periods of growth and financial challenges throughout its history. In recent years, Frontier has focused on expanding its route network and fleet, while also implementing strategies to enhance the customer experience and improve operational efficiency.  

Spirit Declines the Offer


However, Spirit Airlines has rejected Frontier’s offer, stating that it is not favorable and that they plan to continue with their own restructuring plan to exit bankruptcy in the first quarter of 2025.

Spirit maintains that its independent restructuring plan offers a better path to long-term profitability and shareholder value.

The road ahead for this merger remains uncertain. While Frontier remains optimistic about the potential benefits of the deal, Spirit’s rejection indicates a significant hurdle.

The outcome of this situation will have far-reaching implications for the airline industry, impacting airfares, competition, and the overall travel experience for consumers.

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