Frontier Group Holdings, Inc., parent company of Frontier Airlines (F9, Denver International), has made a renewed proposal to merge with Spirit Airlines (NK, Fort Lauderdale International), it announced in a press release on January 29. The deal would be structured through newly issued Frontier debt and ordinary shares.
The proposal includes issuing USD400 million in debt and granting 19% of Frontier’s ordinary equity to Spirit’s creditors. Frontier estimates the total value of its offer to be at least USD2.16 billion, with the potential to reach up to USD2.9 billion.
If the merger goes ahead, the combined airline would become the fifth-largest in the United States, carrying 100 million passengers and operating over 400 aircraft within a few years, according to Frontier. The company’s management expects an expedited due diligence process to be completed within five to ten days.
However, Spirit Airlines’ chief executive, Ted Christie, and chairman of the board, Mac Gardner, expressed concerns over the terms. In a letter sent to Frontier on January 11, they said that the new proposal represents “an extremely material reduction in value compared to our 2024 agreement in principle.”
Christie and Gardner pointed out that “the USD580 million in take-back debt has been reduced to USD400 million, and the 26.5% equity stake to 19%. Furthermore, your proposal assumes our creditors will make an additional USD350 million equity investment, effectively requiring them to fund their own debt position in the combined company.”
They added that the proposal falls short of the current needs of the ultra-low-cost carrier, which is currently under Chapter 11 bankruptcy protection. “The USD400 million of debt is less than half of what will be provided to creditors under the existing restructuring plan.”
Amid ongoing discussions, Spirit Airlines’ board directed management to proceed with its standalone Chapter 11 reorganisation, which had been delayed due to the talks, and which it believes “will position us well for the future,” according to a letter dated January 28. Frontier’s chairman, Bill Franke, argues that under Spirit’s current standalone plan, the airline would emerge highly leveraged and continue to operate at a loss.
The two airlines previously attempted to merge in 2022, but Frontier was outbid by a higher offer from JetBlue Airways (B6, New York JFK), which was ultimately blocked by a federal judge last year. Frontier made another takeover attempt last autumn, but talks collapsed before Spirit filed for Chapter 11.
