Spirit Airlines has once again rejected a third takeover bid from budget competitor Frontier Airlines, maintaining its focus on its own bankruptcy reorganisation plan aimed at stabilising its finances. The latest offer, which mirrors previous proposals, includes $400 million in debt and a 19% stake in Frontier Group Holdings Inc., the parent company of Frontier Airlines.
Frontier, which has previously made similar bids, expressed its belief that a merger between Spirit and Frontier could have created more value than Spirit’s standalone plan. However, Frontier emphasised its focus on delivering value for its shareholders, especially in the current market conditions, and stated it was not willing to proceed with further negotiations at this time.
Spirit, on the other hand, rejected the offer almost immediately, claiming that it had presented a counterproposal to Frontier this month, which was subsequently rejected. Spirit is set for a court hearing Thursday on its reorganisation plan, with the expectation of completing its restructuring by the first quarter of this year.
Frontier’s initial attempt to merge with Spirit was in 2022 but was outbid by JetBlue, which faced its own legal challenges. The Justice Department sued to block JetBlue’s $3.8 billion acquisition bid, claiming it would harm consumers by raising prices for Spirit’s low-fare customers. A federal judge ruled in favour of the Justice Department, leading to the abandonment of the JetBlue-Spirit merger in March 2023.
Spirit, the largest U.S. budget airline, filed for bankruptcy in November, struggling with over $2.5 billion in losses since 2020 and facing significant upcoming debt payments. The company’s core business of offering budget-friendly flights has been impacted by competitive pricing from other U.S. airlines and a drop in leisure travel fares. Shares of Frontier Group fell 3% before the opening bell on Wednesday following the latest news.
