Spirit and Frontier Airlines Accounce a $6.6 Billion Merger
Feb 7, 2022 By MarketDepth
Spirit Airlines (NYSE: SAVE) and Frontier Airlines (NASDAQ: ULCC), announced a USD6.6 Billion merger agreement on Monday, set to create America’s fifth-largest airline. The companies have yet to disclose which brand they will fly under or who will lead the management of the new airline. Amid the merger, the company will offer more than 1,000 daily flights to over 145 locations.
Frontier Gets Controlling Interest
The merger grants Frontier airlines a 51.5% controlling stake in the new airline. Meanwhile, Spirit will be given 1.9126 shares of Frontier as well as USD2.13 in cash for each share that they own, a 19% premium of Spirit shares.
“This transaction is centered around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public.”Ted Christie, president and CEO of Miramar, Fla.-based Spirit
Both boards approved the deal during the weekend. It was decided that Frontier Chairman Bill Franke will also chair the merged company. Franke said he is prepared to “create America’s most competitive ultra-low fare airline for the benefit of consumers.”
Financial Difficulties During Pandemic
Both companies have experienced financial difficulties throughout the last two years following the pandemic. Spirit recently reported a 2021 loss of USD440.6 Million, an improvement from 2020’s USD719.6 Million loss. Frontier reported a USD299 Million loss for 2021, approximately the same as it reported in 2020.
“This combination is all about growth, opportunities and creating value for everyone – from our Guests to our Team Members to the flying public at large. We’re a perfect fit – our businesses share similar values, including our longstanding commitment to affordable travel. At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Together, we will be even more competitive for our Guests and our Team Members, and we are confident we can deliver on the benefits of this combination to consumers.”Mac Gardner, Chairman of the Board of Spirit