Report: Spirit-Frontier talks revived: Travel Weekly

Report: Spirit-Frontier talks revived

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In February 2022, Frontier entered into a $2.9 billion purchase agreement for Spirit, but JetBlue swooped in with a larger offer that the DOJ went on to block.
In February 2022, Frontier entered into a $2.9 billion purchase agreement for Spirit, but JetBlue swooped in with a larger offer that the DOJ went on to block. Photo Credit: Frontier Airlines

Spirit Airlines has revived discussions with Frontier Airlines about a potential merger, the Wall Street Journal reported Wednesday. 

The report cited anonymous "people familiar with the matter" and noted that talks are at an early stage and that a deal might not be finalized. If an agreement were to be reached, it would likely be as part of a Chapter 11 bankruptcy restructuring by Spirit, the story also says. 

Spirit and Frontier both declined to comment on the Wall Street Journal story. 

In February 2022, Frontier entered into a $2.9 billion purchase agreement for Spirit. The merger would have combined the two largest U.S. ultralow-cost carriers into a discount juggernaut. However, JetBlue swooped in with a $3.8 billion offer that proved irresistible to Spirit shareholders, despite warnings from Spirit management that such a combination would have little chance of gaining approval from antitrust regulators in the Justice Department.

The DOJ ultimately did sue to block the merger, winning the case last winter.

Spirit now finds itself in a quandary, bleeding money as consumer preferences have turned against discount airlines and toward full-service carriers. The airline reported an operating loss of $360 million in the first half of this year and an operating loss of $496 million in 2023. 

Spirit on Oct. 18 said it obtained a deadline extension from its credit card processor for the refinancing of $1.1 billion in loyalty program-backed debt that comes due next year. The airline now has until Dec. 23 to reach a refinancing agreement. Spirit also reported that it has borrowed the entire amount available under a $300 million revolving credit line that matures in September 2026. 

The airline said it expects to end 2024 with $1 billion in liquidity, down from $1.3 billion at the end of 2023. The company's poor results have sparked concerns about a potential Chapter 11 bankruptcy filing. 

Any new agreement between Frontier and Spirit would surely be for much less than the $2.9 billion agreement in 2022.

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