Spirit and Frontier Airlines Are Talking About a Merger Again, WSJ Says

Spirit Airlines and Frontier Airlines have renewed talks about the prospect of a merger, according to a report from The Wall Street Journal, citing people familiar with the matter. 

The report said the two carriers have held discussions about a potential merger, but the talks are still in the early stages and may not result in a deal. 

A potential merger with Frontier would happen as part of Spirit restructuring its debt and other liabilities related to bankruptcy, according to the report.

Spirit is still in negotiations with bondholders over the terms of a possible bankruptcy and is exploring options to restructure its balance sheet that involve out-of-court transactions. 

Frontier and Spirit declined to comment on the Journal’s report. 

Frontier’s Previous Bid for Spirit

Spirit and Frontier were in talks over a merger two years ago. However, the deal fell apart after JetBlue made a more attractive offer to Spirit shareholders. Frontier initially offered to buy Spirit for $6.6 billion in a cash-stock deal that included a $2.9 billion equity value of Spirit, along with net debt and operating lease liabilities. 

However, JetBlue made an all-cash offer valued at $3.8 billion at the time and included a higher break-up fee at $400 million. 

After the JetBlue-Spirit merger collapsed, Frontier has publicly declined to comment on the idea of merging with Spirit again. At a Wings Club event in May, Frontier CEO Barry Biffle said Spirit had “some of the same challenges that we have,” but wouldn’t say if Frontier was open to a merger. 

The carrier has struggled to post a profit since the pandemic and its future became increasingly uncertain in March after a federal judge blocked its merger with JetBlue. 

On Friday, Spirit said it extended the deadline to refinance more than $1.1 billion in debt related to a credit card processing agreement. The carrier also drew down the entire $300 million it had available through its credit line. 

To shore up its balance sheet, Spirit has furloughed pilots and deferred its Airbus deliveries. The ultra-low-cost carrier also announced that it would roll out premium products and bundled fares to attract customers willing to spend more.