Spirit Airlines Rejects Frontier Offer
Deal News | Jan 29, 2025 | EIN
In recent filings, Spirit Airlines has rejected a merger proposal from Frontier Airlines, citing its financial insufficiency. Frontier had proposed a $2.1 billion offer comprised of $400 million in debt and a 19% share equity. Spirit's management deemed the proposal insufficient, particularly because it failed to address their funded debt and did not compensate for their equity. The discussion of a merger between the two carriers is seen against the backdrop of Spirit's Chapter 11 bankruptcy proceedings. Previously in Autumn 2024, Frontier made a more substantial offer which it retracted. In emails between executives, Frontier's CEO emphasized the urgency of the merger before Spirit exits bankruptcy due to potential increased competition and economic instability. Frontier argued a merger could stabilize Spirit and provide better recovery for creditors, but Spirit remains committed to a standalone reorganization unless a more comprehensive proposal is presented.
Sectors
- Aviation
- Financial Services
Geography
- United States – Spirit Airlines and Frontier Airlines are both headquartered in the United States, and the proposed merger pertains to the US market, especially the low-cost carrier sector competing with major airlines.
Industry
- Aviation – The article is centered on a proposed merger between two major airlines, Spirit Airlines and Frontier Airlines, which operate within the aviation sector.
- Financial Services – This industry is involved due to the financial aspects of the merger proposal, the rights offering, and considerations of creditor recoveries.
Financials
- $2.1 billion – Proposed total value of the merger offer from Frontier to Spirit Airlines.
- $400 million – Take-back debt proposed by Frontier Airlines as part of the merger offer.
- 19% – Equity offered to Spirit Airlines' debtholders as part of Frontier Airlines' proposal.
- $350 million – Rights offering and DIP financing amount involved in Spirit Airlines' Chapter 11 proceedings.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Spirit Airlines | Target company | Company | An American ultra-low-cost carrier, currently navigating Chapter 11 bankruptcy proceedings. |
| Frontier Airlines | Bidding Company | Company | A low-cost airline proposing a merger with Spirit Airlines to create a large budget carrier in the US. |
| Ted Christie | President and CEO of Spirit Airlines | Person | Leading the opposition to Frontier Airlines' merger proposal. |
| McIntyre Gardner | Chairman of the Board of Spirit Airlines | Person | Involved in reviewing and responding to the merger proposal from Frontier Airlines. |
| Barry Biffle | President and CEO of Frontier Airlines | Person | Proposing the merger to stabilize and integrate Spirit Airlines within Frontier. |
| US Department of Justice | Government | Government | Previously involved in the successful lawsuit against the merger of Spirit Airlines with JetBlue. |