Frontier Airlines Renews Merger Bid for Spirit Airlines Amid Bankruptcy
Frontier Airlines has revived its efforts to merge with Spirit Airlines, despite Spirit’s ongoing bankruptcy proceedings. This move comes after a turbulent period in the budget airline sector, marked by financial struggles, increased competition, and regulatory roadblocks that have thwarted previous merger attempts.
In February 2022, Frontier initially sought to merge with Spirit in a deal that would have created the fifth-largest airline in the U.S. However, this plan was abandoned when JetBlue Airways presented a more attractive offer. Ultimately, JetBlue’s $3.8 billion bid was blocked by the U.S. Department of Justice in March 2023 due to antitrust concerns. As a result, Spirit found itself in an increasingly precarious financial position, culminating in its Chapter 11 bankruptcy filing in November 2024.
On January 7, 2025, Frontier submitted a new proposal to Spirit’s bondholders, arguing that a merger would provide a stronger foundation for recovery than Spirit’s standalone restructuring plan. The offer included issuing $400 million in debt and granting Spirit’s creditors a 19% stake in Frontier’s common equity, valuing the deal at approximately $2.1 billion. Frontier positioned the merger as a necessary step to create a more competitive ultra-low-cost carrier that could challenge larger airlines and offer consumers more affordable travel options.
Despite Frontier’s renewed push, Spirit’s bondholders and management swiftly rejected the offer, calling it “woefully insufficient financially.” They expressed concerns that the proposed deal would burden the merged airline with excessive debt and fail to provide a sustainable path forward. Instead, Spirit has opted to proceed with its existing restructuring plan, which aims to guide the airline out of bankruptcy by the end of the first quarter of 2025.
The budget airline sector has faced mounting difficulties in recent years. Since 2020, Spirit has reported over $2.5 billion in losses, leading to layoffs, reduced flight schedules, and the sale of aircraft. The airline’s struggles highlight broader industry challenges, including rising operational costs and stiff competition from larger carriers with greater financial resources.
While Spirit has declined Frontier’s latest bid, Frontier remains open to further negotiations. The possibility of a merger may resurface depending on Spirit’s financial trajectory in the coming months. For now, both airlines must navigate a difficult market, with or without consolidation, as they seek to maintain viability in an increasingly competitive landscape.