Frontier Airlines Holdings, the parent of Frontier Airlines (F9, Denver Int'l), has announced it will absorb Spirit Airlines (NK, Fort Lauderdale Int'l) through a merger transaction for a total consideration of USD6.6 billion, including the assumption of net debt and operating lease liabilities.

The terms of the deal assume that each of the existing shareholders of Spirit Airlines will receive 1.9126 shares of Frontier Holdings for each Spirit share, as well as an additional USD2.13 in cash, resulting in USD25.83 worth of compensation per Spirit share, thus valuing the company at USD2.9 billion. An additional USD3.7 billion will come through the assumption of Spirit's financial obligations by Frontier Holdings.

As a result of the merger, Frontier's existing shareholders will own around 51.5% of the post-merger company, while Spirit's shareholders will own approximately 48.5%. The new company will have 12 directors, of which seven will be nominated by Frontier. William Franke, who is the Chairman of Frontier's Board of Directors and the managing partner of Frontier's main shareholder, Indigo Partners (as well as the Chairman of Wizz Air Holdings), will remain in his position post transaction.

"We are thrilled to join forces with Frontier to further democratize air travel. This transaction is centred around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public," President and Chief Executive of Spirit Ted Christie said.

The transaction is subject to customary regulatory approvals, including an antitrust review, and has yet to be approved by Spirit's shareholders. The ULCC is traded on the New York Stock Market (NYSE) and has a dispersed ownership structure. The largest investor, Vanguard Group, holds an 8.9% stake in the carrier. In turn, Indigo Frontier Holdings Company, LLC, holds approximately 82.8% of Frontier's common stock. Completion is anticipated in the second half of 2022.

Concerning the shift to a single air carrier certificate, neither airline would be drawn into giving a timeline for what is expected to be the winding down of the Spirit ACC.

"It’s business as usual for now, and no timeline has been given for the operational shift to a single air carrier certificate," a Spirit spokeswoman told ch-aviation.

But once done, the airlines said the merger would create some 10,000 new jobs by 2026 due to accelerated growth.

The ch-aviation fleets advanced module shows that Frontier Airlines currently operates 111 aircraft, including sixteen A320-200s, seventy-four A320-200Ns, and twenty-one A321-200s. The airline has fifty-seven A320-200Ns, 158 A321-200Ns, and eighteen A321-200NY(XLR)s on firm order from Airbus. Spirit Airlines operates 174 aircraft: thirty-one A319-100s, sixty-four A320-200s, forty-nine A320-200Ns, and thirty A321-200s. Its order book comprises thirty-one A319-100Ns, sixty-two A320-200Ns, and thirty-six A321-200Ns.

Combining the airline's current fleets would make them the sixth-largest passenger airline in the United States by fleet size, marginally ahead of JetBlue Airways, and the fifth-largest by the total number of seats in the fleet, the ch-aviation capacities module shows.

Editorial Comment: Adds Spirit comment on shift to a single AOC - 07.02.2022 - 16:58 UTC