Frontier has purchased Spirit Airlines in a cash-and stock deal worth $2.9 billion. This will make the country’s fifth largest carrier. Frontier Group Holdings, Spirit Airlines and other companies anticipate $1 billion annually in consumer savings. They also plan to increase their services by placing more than 350 aircraft orders.
Frontier and Spirit also plan to create more jobs. These companies expect to add 10,000 jobs directly and thousands more at their business partners by 2026.
Spirit CEO Ted Christie stated that the transaction was about creating an aggressive ultralow-fare competitor in order to better serve our guests, increase career opportunities for our staff members, and result in more consumer-friendly airfares for the flying public.
Antitrust regulators may pay close attention to the carriers. The Biden administration has taken a more aggressive stance against large corporate mergers. Despite three rounds of federal aid from the U.S., airlines have been in an extremely difficult spot during the pandemic. They are now at a weaker position going into 2022. This could help Spirit and Frontier argue that they must join forces to survive and boost competition.
Frontier shareholders will hold 51.5%, while Spirit stockholders will have 48.5%. The transaction is expected close by the end of the second half year. Based on last year’s results, the combined company will have annual revenues of $5.3 million. Spirit shareholders still need to approve it. The board will consist of seven Frontier members and five Spirit members. The combined company will have William Franke, Frontier Chair, as its chairman. Shares of Frontier, which is based in Denver fell 2.2% prior to Monday’s opening bell. The shares of Spirit, which is based in Miami, rose 12.5%.