Spirit Airlines to Stick with Bankruptcy Plan, Rejects Frontier

Frontier Airlines has made a renewed attempt to merge with Spirit Airlines, three years after an earlier proposal fell through. On Jan. 7, 2025, Frontier presented an offer valued at US$2.1 billion in stock and cash. However, Spirit rejected the proposal, arguing that it was too low compared to the US$2.9 billion merger agreement the two airlines had in 2022.

In 2022, Spirit walked away from the offer to accept a higher bid from JetBlue Airways. However, the US Department of Justice blocked that merger in 2023 over antitrust concerns. Following a series of challenges, including failed efforts to restructure its debt, Spirit filed for bankruptcy in November 2024.

Frontier’s new proposal includes a condition requiring Spirit’s creditors to invest US$350 million, which Spirit executives deemed insufficient. They rejected the offer, confirming they would proceed with their bankruptcy case while remaining open to future discussions.

Should the merger go ahead, the combined airlines would become the fifth-largest in the United States, controlling 8.5% of the domestic flight market. The airlines have minimal overlap in routes (only 18%), and Spirit boasts a stronger presence in international markets. The next key milestone will be a bankruptcy court hearing on Spirit’s reorganization plan scheduled for Feb. 13, 2025.

Analysts estimate the merger could increase annual revenue by US$500 million and reduce costs by US$100 million. However, the deal would still need approval from antitrust regulators, with some experts speculating that the Trump administration might be more favorable toward such deals.

Both Frontier and Spirit are known as "ultra low-cost carriers," and a merger between the two could create a formidable competitor in the budget airline space. William A. Franke, chairman, Frontier's board, is also the founder of Indigo Partners, a private equity firm with connections to both Frontier and Spirit.