Spirit Rejects Frontier's Acquisition Proposal Again
Deal News | Jan 29, 2025 | EIN
Frontier Airlines has made a renewed attempt to acquire Spirit Airlines, which is undergoing Chapter 11 bankruptcy proceedings. Despite the troubled financial state of Spirit, the management of Spirit rejected Frontier's proposal delivered on January 7, 2025. The rejected proposal required Spirit to secure a $350 million equity investment from its noteholders, who were unwilling to comply with the terms. Additionally, a backstop fee of $35 million was part of the deal conditions. Frontier's offer included $400 million in debt and a 19% stake in the company, highlighting its interest in sealing a fresh acquisition agreement. However, agreement on the structure, value, or terms of the acquisition has not been reached. The rejection comes amid an evolving market scenario where low-cost airlines in the U.S. are grappling with intensified competition, leading to modified strategic plans as they aim to align their offerings with market demands. Spirit continues focusing on its restructuring pathway, targeting completion by the first quarter of 2025, despite the challenges that beset this sector.
Sectors
- Aviation
- Financial Services
Geography
- United States – Both Spirit Airlines and Frontier Airlines operate primarily within the United States, and the bankruptcy and acquisition discussions are taking place within the U.S. regulatory framework.
Industry
- Aviation – The article involves two major U.S. low-cost airlines, Spirit Airlines and Frontier Airlines, navigating a potential acquisition amid challenging industry dynamics.
- Financial Services – The situation involves financial restructuring, equity investment requirements, and debt offerings, which are fundamental aspects of financial services dealing.
Financials
- $350 million – Equity investment required from Spirit's noteholders for the proposed acquisition by Frontier.
- $35 million – Backstop fee required by the terms of Frontier's proposal to Spirit.
- $400 million – The debt offering included in Frontier's proposal to Spirit Airlines alongside a 19% equity stake.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Spirit Airlines | Target Company | Company | Spirit Airlines, a U.S.-based low-cost carrier undergoing Chapter 11 bankruptcy proceedings, is being targeted for acquisition by Frontier Airlines. |
| Frontier Airlines | Bidding Company | Company | Frontier Airlines, a low-cost carrier in the U.S., has proposed acquiring Spirit Airlines as part of its strategy to consolidate its position within the industry. |
| JetBlue Airways | Previous Bidding Company | Company | JetBlue Airways previously made a successful bid for Spirit Airlines which was later nullified by regulatory authority on competition grounds. |