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Frontier is buying Spirit Airlines to create a major budget carrier

Frontier is buying Spirit Airlines to create a major budget carrier
Posted at 4:25 PM, Feb 07, 2022
and last updated 2022-02-07 11:30:45-05

Frontier Airlines announced on Monday that it would purchase Spirit Airlines for $2.9 billion in cash and stock, saying that it will combine the two to create America’s most competitive low-fare airline.

According to the Wall Street Journal, Frontier will own about 51.5% of the combined company once the deal closes. The merger will make them the fifth-largest airline in the U.S.

“We’re a perfect fit — our businesses share similar values, including our longstanding commitment to affordable travel,” Spirit’s board chair, Mac Gardner, said in a news release. “At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Together, we will be even more competitive for our Guests and our Team Members, and we are confident we can deliver on the benefits of this combination to consumers.”

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The merger is expected to close in the second half of this year.

Some analysts warn that the deal may face opposition from regulators, as President Joe Biden’s administration has taken a tough stance on big corporate mergers. For years, the Justice Department has been concerned about consolidations in the industry leading to less competition and higher fares in the airline industry.

The companies say that the merger will enable them to benefit consumers with more ultra-low fares for more travelers in more destinations and compete more aggressively, especially against the country’s four largest airlines: American, Delta, Southwest and United.

“For years, we’ve been dealing with the hegemonic domination of the Big Four in the United States. And now more than ever, we need competition in this country and that’s what this does,” Barry Biffle, Frontier’s CEO, told the Wall Street Journal. “This provides more low fares to more people in more places.”

The companies have also pledged to have the “youngest, most fuel-efficient and greenest fleet” of planes in the U.S. while also adding 10,000 direct jobs by 2026.

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