Earlier today, it was disclosed by Spirit Airlines and Frontier Airlines, two budget-friendly air travel providers that mainly operate within the United States, that they have agreed to merge their operations officially. This merger is estimated to be worth around $6.6 billion, and the merging of the companies’ total assets is poised to elevate the resulting combined entity to become the fifth-largest in the entire United States, standing behind major players such as American, Delta, United, and Southwest Airlines.
“The focal point of this deal is to establish a robust ultra-low-cost competitor that can better serve our customers, create more job prospects for our staff, and enhance competitive dynamics, ultimately leading to more traveler-friendly airfares,” expressed Ted Christie, CEO of Spirit, in an official statement.
Just like many other airlines in recent years, Spirit and Frontier have encountered significant downturns in their financial performance due to the impacts of the COVID-19 pandemic on air travel. In their recent financial disclosures, Spirit incurred a loss of $440.6 million in 2021 and $719.6 million in 2020, while Frontier reported a loss of $299 million in 2021, a figure similar to their loss in the preceding year. On an individual basis, these losses appear substantial, but in the scenario of a merger, the combined losses would only represent approximately 2% of their total revenue over the past two years.
BREAKING: Frontier has agreed to acquire Spirit Airlines for $2.9 billion in cash and stock, bringing together two budget carriers focusing on the rebounding leisure-travel sector https://t.co/nuIhMxlQFj
— Bloomberg (@business) February 7, 2022
It has not been clarified by the companies as to which brand will be retained for the merged entity, or if a completely new identity will be adopted. Additionally, there are apprehensions regarding the merger facing scrutiny from federal antitrust regulators, especially following the dissolution of a smaller partnership between American and JetBlue, indicating a trend towards stricter regulatory measures.
