Frontier Airlines Makes Another Bid for Spirit

Frontier Airlines has announced a renewed bid to acquire Spirit Airlines, which filed for Chapter 11 bankruptcy protection in November 2024 following years of financial challenges and a failed merger with JetBlue Airways. The proposed transaction involves the issuance of new Frontier debt and common stock, aiming to provide greater value to Spirit’s financial stakeholders compared to Spirit’s standalone restructuring plan.

This move comes after previous merger attempts between Frontier and Spirit in February of 2022, which were ultimately unsuccessful. Frontier’s chairman, Bill Franke, emphasized that the proposal offers a compelling opportunity to create a stronger low-fare airline capable of competing more effectively and entering new markets at scale.

Spirit Airlines has faced significant financial difficulties, including mounting losses, increased debt, and heightened competition. The airline’s previous merger attempt with JetBlue was blocked by a federal judge in January 2024 due to antitrust concerns, leading to Spirit’s eventual bankruptcy filing

Under the proposed deal, Spirit Airlines’ existing debtholders would contribute an additional $350 million in exchange for 19% ownership of the combined airline and $400 million in debt equity. This offer is notably less favorable compared to the 2024 agreement in principle, which granted debt holders 26.5% ownership and $580 million in take-back debt, without requiring the $350 million investment. This change, disclosed in Spirit’s 8-K filing, suggests a revised financial structure that could impact creditor support and the overall feasibility of the merger.

In its reply to Frontier, Spirit said its advisors “believe [the] current proposal is so insufficient as to not merit a counter.”