Frontier and Spirit, the two largest low-cost airlines, are teaming up to give passengers a deal they cannot resist. Though the airlines have yet to announce which name they will fly under, the $6.6 billion deal makes the airline the fifth-largest American airline.
According to CNBC, the merger gives Denver-based Frontier Airlines a 51.5% controlling stake in the combined airline. Spirit investors will receive 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders an implied value of $25.83 per share, which is a 19% premium over the value of Spirit shares at the end of last week, the companies said.
President and CEO of Miramar, Fla-based Spirit, released a statement describing the reasoning behind the decision.
“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.” The deal comes after both airlines struggled to recover from the pandemic, resulting in fewer passengers.
The same union represents Frontier and Spirit. However, Frontier Chairman Bill Franke will lead the newly combined company.
According to federal statistics, Spirit and Frontier are known for their insanely low fares. Spirit received many complaints due to charging passengers extra for everything like carry-on bags. Frontier also received the industry’s worst customer satisfaction ratings.
A committee led by Franke will answer all questions regarding updates and changes about the new airline. The last time U.S. airlines merged was in 2016 with Alaska Airlines and Virgin America.
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