This morning, two U.S.-based low-cost airlines, Spirit Airlines and Frontier Airlines, have announced their plans for a merger. The merger is valued at approximately $6.6 billion and will elevate the combined airline’s ranking to become the fifth-largest in the country, following major carriers like American, Delta, United, and Southwest Airlines.
CEO Ted Christie of Spirit Airlines expressed that the merger aims to create a strong, competitive ultra-low fare airline that will better serve customers, provide more opportunities for their employees, and drive competition in the industry to offer more affordable airfares.
Both Spirit and Frontier Airlines have experienced financial challenges due to the impact of the COVID-19 pandemic on air travel demand. Spirit reported losses of $440.6 million in 2021 and $719.6 million in 2020, while Frontier reported a loss of $299 million in 2021, similar to its losses in 2020. Despite these individual setbacks, combining their assets would result in a consolidated loss of only about 2% of their total revenue over the past two years.
LATEST: Frontier agreed to buy Spirit Airlines for $2.9 billion in cash and stock, joining two budget carriers focusing on the post-pandemic leisure-travel market https://t.co/nuIhMxlQFj
— Bloomberg (@business) February 7, 2022
The specifics of the merger, such as which brand will prevail or if a new name will be adopted, have not been disclosed yet. However, there are concerns regarding potential antitrust scrutiny by federal regulators following the dissolution of a smaller partnership between American and JetBlue, indicating a trend toward stricter regulatory policies.
