Spirit Airlines and Frontier Airlines parent Frontier Group Holdings have signed a definitive agreement to merge, creating what they call the most competitive ultra-low-fare airline in the U.S., the companies revealed Monday. The $6.6 billion transaction, which has won unanimous approval from the boards of directors of both companies, values Spirit at $2.9 billion. Upon the transaction’s closing, Frontier shareholders will own some 51.5 percent of the merged airlines while existing Spirit shareholders will own the balance. The sides expect the transaction to close in the second half of this year.
William Franke, the chairman of Frontier’s board of directors and the managing partner of Indigo Partners, Frontier’s majority shareholder, stressed Indigo’s long history with both Spirit and Frontier and the potential for the combination to benefit customers of both airlines. “We worked jointly with the board of directors and senior management team across both carriers to arrive at a combination of two complementary businesses that together will create America’s most competitive ultra-low-fare airline for the benefit of consumers,” he said in a statement.
Spirit president and CEO Ted Christie spoke of the merger’s potential to further democratize air travel. “This transaction is centered 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,” he said. “We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent guest service.”
According to a joint statement issued Monday, the airlines estimate the merger will deliver $1 billion in annual consumer savings and result in more than 1,000 daily flights to more than 145 destinations. The combination will also result in an order total of more than 350 aircraft, and plans call for the addition of routes to underserved communities in the U.S., Latin America, and the Caribbean.
Spirit and Frontier expect to add 10,000 direct jobs and thousands of additional jobs at the companies’ business partners by 2026. “Given the growth of the combined company, it is expected that all current team members will have an opportunity to be a part of the combined airline,” the statement added. “Team members of the combined airline will have better career opportunities and more stability as part of the most competitive ultra-low-fare airline in the United States.”
Spirit and Frontier estimate that the merged company will generate annual revenues of $5.3 billion based on 2021 results and delivery of $500 million in annual “run-rate synergies.”
The board for the new airline will consist of 12 directors (including the CEO), seven of which Frontier will install and Spirit the rest. Franke will serve as the chairman of the board of the combined company.