Frontier Airlines Buying Spirit Airlines
Whoa. This was not news I had expected to wake up to. Frontier Airlines is planning on buying Spirit Airlines in a $2.9 billion cash-and-stock deal. If the deal goes through it would make them the 5th largest carrier in the US. They would be behind American, Delta, Southwest and United Airlines. According to ABC News the tie-up is valued at $6.6 billion when accounting for the assumption of debt and other liabilities. They are expecting the deal to close the second half of 2022.
This is surprising for a few different reasons. First off, Spirit is currently the larger operation so it is a bit surprising they are the one being bought. I guess in the history of air travel Frontier has the better brand name. So many people equate Spirit to all of their issues decades back. Maybe because of that it is for the best.
Another thing that has yet to be determined is if this will pass antimonopoly regulators. Big corporation mergers is something the Biden administration has spoken out against so it will be interesting to see what stance they take. The pandemic has wreaked havoc on airlines so that may encourage a softer stance in this instance.
According to ABC News Spirit shareholders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on Friday. Spirit Airlines shareholder approval is still needed.
After the merger, the company would have expected revenues of over $5 billion a year. The board will be comprised of seven members named by Frontier and five members named by Spirit.
Frontier Airlines Buying Spirit Airlines – My Thoughts
Any time a competitor is taken off the board it is a negative for us, the consumer. If Spirit and Frontier are not in competition for your dollar it means that fares will likely go higher. We will also lose some route options as the two airlines would look to streamline services. Which accounts for some of their planned $1 billion in annual savings after the merger. If both Spirit and Frontier currently fly a particular route they will likely consolidate some of the route times which offers less options for us, the consumer. It will be interesting to see if there is an issue with the antimonopoly aspect. I wouldn’t assume so but it is always a big hurdle to clear in deals like this.
On the positive side of things, that Frontier status match you did may have just become a bit more valuable later in the year.
What do you think of the news? Let me know in the comments.
Lower Spend - Chase Ink Business Preferred® 100K!
Chase Ink Business Preferred® is a powerful card that earns 3X Ultimate Rewards points in a broad range of business categories on the first $150K in spend per year. Right now earn 100K Chase Ultimate Rewards points after Learn more about this card and its features!
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
I used both airlines several times from 2017-2021 and had good experiences with both airlines as a whole and with attendants and passengers compared with other well-known names. I expect to see 1) a lot of merger fare deals, and 2) snafus during the transition if merger is approved.
I’m ramping up (a) merging P1/P2 Spirit miles balances into a family balance in hopes that rare and valuable benefit survives; (b) ramping up my BOA Spirit card spend to status to hit Spirit’s highest tier prior to the merger. You gotta take a bet now and then, and betting that locking in these benefits will pay off with the merged carrier, at least through 2023. At the least the merged account should be eligible to go under a single person and that eliminates the need for 2 accounts earning; and the Spirit upper tier benefits are some of the best to be found on a second tier carrier. Have flown Sprit multiple times and never an issue, in fact, found the metal to be superior.
I don’t hate myself enough to fly Spirit or Frontier…and American is about to join them on my hate list.
With that being said, I like competition even if I don’t fly their airlines. Frontier and Spirit both fly non-stop from my home airport to places that American and Delta does and having them around keeps both American and Delta in check…so for that reason, I hope the merger fails.
They have done a good job of driving down prices from the other 4 airlines for sure.
@Mark, unfortunately you won’t be able to take the Big Front seat for much longer!
🙁
I never flown Spirit and only once with Frontier, however I did buy the recent status match to the 100K level. I’m looking forward to trying it out! That being said, consolidation in the industry is a historic norm and iconic names like Braniff, Northwest, Continental, TWA, Eastern, Ozark, PanAm, AirTran and many others have been relegated to the dust bin of history, leaving nothing behind but fading contrails. Out with the old and in with the new! Travel hacking is not a static situation, rather it is a fluid mosaic of new and exciting challenges and opportunities. Don’t we all long for the good old days of last month? Just when we think all hope is lost, something unexpected and better than before reignites the dying embers of our Award Wallets! Conservation International. Need I say more? Personally, I like changes and the fleeting miscalculations made by banks, hotels, airlines, etc. Thanks to our village, we become the rare benefactors of these expensive errors just before they vanish like a fart in the wind. I’ll be thrilled to see what inefficiencies the Frontier/Spirit merger gives rise to and I’m prepared to exploit them all!
That is a good way to look at it for sure if something does come from it I am sure we will be able to figure it out 🙂
When contemplating a corporate merger of organizations with shoddy customer services like Spirit and Frontier Airlines, please consider the acquisition of Marriott International. With a stellar portfolio trifecta of corporate crap, I am confident this new organization would evolve to become worthy of using the Bonvoyed or Bonvoy moniker.
Imagine if Marriott bought the newly merged airline. Individual aircraft would be owned by independent owners, who would “manage” award inventory. And, of course, tier benefits would be ignored. Wouldn’t *that* be fun.
That would be quite the show to watch
This should be interesting.
The merger process for these two will take an extraordinarily long time, as both companies have awful operations, IT systems and website interfaces.
That is true. I can only imagine the hiccups along the way and how they will impact us.