Frontier Airlines and Spirit Consider Re-Opening Merger Talks

Spirit Airlines is looking to avoid bankruptcy and bounce back after a shaky couple of years. Since the airline had managed to extend a deadline to renegotiate more than a billion dollars in debt on Friday, talks about a possible merger with another airline are back on the table. 

New Frontiers

The Wall Street Journal has reported that Frontier Airlines has a renewed interest in acquiring Spirit Airlines. The two low-budget airlines had the chance to merge in 2022, but Spirit backed out of the deal after JetBlue offered a more lucrative deal for an acquisition.

Those close to the matter have told the Wall Street Journal that for the Frontier merger to occur this time, Spirit would have to restructure its debt under a bankruptcy filing. The Journal also clarifies that the negotiations are still in "early stages" and there's a chance that nothing could come of them.
 

Spirit personnel declined to comment on the potential talks with Frontier. Frontier has yet to respond to the media at this time.
 

Spirit has faced financial losses in five of the last six quarters and has heavily discussed a Chapter 11 bankruptcy. Back in August, the airline had been anticipating a large third-quarter loss over an "intense competitive battle" for price-conscious travelers as well as an “oversupply of airline seats in the domestic market”.

The company owes creditors a total of $3.3 billion. The airline had been furloughing staff and reducing the number of flights from its schedule to free up money to repay some of its debt. Earlier this month, WSJ reported that a Chapter 7 bankruptcy involving liquidation wasn't being considered.
 

While over $1 billion has been due to US Bank over the airline's credit card loyalty program, the Dania Beach airline had managed to extend a deadline four hours before expiration to renegotiate the debt. The two parties now have until December 23 to discuss and finalize a new repayment plan. This new development took place last Friday.

Spirit shares jumped up 33% on Monday following news of the deadline extension, after a year of stock plunging 87%.
 

A Spirit spokesperson addressed the media to share that senior secured notes could be due in 2025, with convertible senior notes due the following year.

In December 2023, the $3.8-billion JetBlue-Spirit deal moved forward. Still, it was ultimately nixed in January 2024 by a federal judge who believed the merger would “eliminate a unique competitor that offered low-cost fares”. The two airlines gave up on a possible merger in March, with JetBlue giving Spirit termination fees close to $70 million.  

On September 18 of this year, Alaska Airlines and Hawaiian Airlines closed a deal to merge worth $1.9 billion.