Frontier Airlines has made a second attempt to acquire Spirit Airlines, with a proposal that its struggling rival has rejected.
Frontier was progressing with a deal to acquire Spirit – which is currently making its way through Chapter 11 bankruptcy proceedings – but that fell through in 2022 when JetBlue Airways made a higher offer for the operator. The latter deal was then kiboshed by a federal judge in early 2024 on competition grounds, before Spirit entered restructuring months later.
Stock exchange announcements on 29 January show that Frontier’s fresh proposal to acquire Spirit on 7 January 2025 has been rejected by the latter on the grounds that it would require Spirit’s noteholoders to invest $350 million in equity, ”which they were not willing to do based on the terms of the proposal”.
Spirit also cites a requirement to pay a $35 million backstop fee as part of the deal.
Under the proposal, Spirit’s stakeholders were offered $400 million in debt and a 19% stake in Frontier.
Frontier acknowledges that “no agreement has been reached between the parties in relation to the structure, value or terms of a transaction”.
Spirit says it is pressing ahead with its restructuring process, which it expects to complete during the first quarter of this year.
The US low-cost airline sector is in a period of upheaval as carriers rethink their product offerings in light of tougher competition from network carriers in particular. Those challenges have hit earnings at most US discounters in recent quarters.
Stakeholders have suggested that they expect US president Donald Trump’s administration to be more sympathetic to mergers and acquisition activity in the airline industry.
