Dive Brief:
- Spirit Airlines has rejected an acquisition proposal from rival Frontier Airlines, offered during Spirit’s Chapter 11 bankruptcy reorganization and two years after Frontier was thwarted in its efforts to acquire its low-fare rival. Spirit will proceed with its restructuring as a standalone airline, the company told Frontier executives on Tuesday.
- Frontier’s most recent proposal, on Jan. 7, offered Spirit creditors $400 million for their debt and a 19% stake in Frontier — less than a prior offer for Spirit last year. Frontier said its reviews of Spirit’s bankruptcy filings “demonstrate that Spirit's standalone plan will likely result in an unprofitable airline with a high debt load and limited likelihood of success.”
- Spirit, which has lost more than $2 billion since 2020, filed for bankruptcy in November 2024 amid broader shifts in the industry. It affirmed Wednesday that it expects to exit bankruptcy by April 1. Low-fare budget carriers like Spirit and Frontier have seen their labor expenses increase with new contracts just as airlines have seen many U.S. travelers splurge for premium products and services offered by the more full-service carriers.
Dive Insight:
Spirit said it would proceed with a Feb. 13 hearing for the bankruptcy court to consider its reorganization plan.
Frontier’s revised offer followed one it had made before Spirit’s bankruptcy, giving creditors $580 million in take-back debt and a 26.5% equity stake in the combined airlines. The newer proposal also called for Spirit creditors to invest $350 million in new equity in the merged company — a request bondholders “emphatically reject,” Spirit told Frontier Chief Executive Barry Biffle and Chairman Bill Franke.
“That demand alone would be outcome determinative, as we of course have no way of extracting $350 million of cash for you from dozens of third parties,” Spirit Chief Executive Ted Christie and Chairman Mac Gardner wrote Tuesday in their most recent response to Denver-based Frontier.
The Jan. 7 offer “falls far short of the consideration” Spirit’s stakeholders would receive under the company’s standalone reorganization plan, Spirit told Frontier executives four days after the proposal was made.
“While we appreciate your continued interest and share your view of the logic of a potential transaction, your January 7 terms (which have not been improved on in the last three weeks) are both inadequate and unactionable,” Christie and Gardner wrote. “Should you wish to make a revised proposal that is in fact capable of closing, and addresses the material deficiencies catalogued here and in our many communications, we would be happy to consider it and again work to activate our stakeholders to do so as well.”
Spirit, based in Dania Beach, Fla., had agreed in 2022 to a sale to Frontier, a deal that collapsed when JetBlue Airways presented a higher offer. The Spirit-JetBlue transaction collapsed in March 2024, two months after a federal judge blocked the deal on grounds that the combination would reduce consumers’ access to lower fares.
The airline’s independent plan rests upon its ability to capture more revenue from customers with more premium products and services, including cabin sections with extra legroom and free Wi-Fi access for customers who choose higher fares.
A combined Spirit-Frontier would be the fifth-largest U.S. airline, surpassing Alaska Air Group, which is working to merge with Hawaiian Airlines.
