Spirit Airlines Snubs Frontier’s Takeover Bid Once More

Spirit Airlines, the largest budget airline in the U.S., has rejected a third takeover offer from Frontier Airlines, emphasizing its commitment to its bankruptcy reorganization plan. This decision underscores Spirit’s choice to focus on stabilizing its finances after filing for bankruptcy protection in November, a measure taken in light of substantial financial losses.

The proposal from Frontier would have granted Spirit shareholders $400 million in debt and a 19% equity stake in Frontier Group Holdings, Inc., the parent company of Frontier. However, Spirit has dismissed this offer, viewing it as insufficient compared to its independent restructuring strategy.

In a statement, Frontier expressed its disappointment over the decision, asserting that the merger would have generated more value than Spirit’s current trajectory. “We remain convinced that the combination of Spirit and Frontier would have created more value than Spirit’s standalone plan,” Frontier stated, reiterating its commitment to prioritizing its shareholders amid a volatile market.

This is not the first time Frontier has sought to merge with Spirit; their initial bid in 2022 was overshadowed by JetBlue’s higher offer. Eventually, the Justice Department intervened, blocking JetBlue’s $3.8 billion bid due to concerns over rising fares for low-cost airline customers. A federal judge supported this action earlier this year, leading both JetBlue and Spirit to withdraw their merger discussions.

Spirit’s current financial saga includes a staggering loss exceeding $2.5 billion since 2020, alongside looming debt payments of over $1 billion due in 2025 and 2026. As it stands, Spirit plans to finalize its restructuring efforts in the upcoming first quarter, with a pivotal court hearing scheduled for Thursday regarding its reorganization plan.

Following the news of the rejected bid, Frontier’s stock experienced a 3% decline in pre-market trading, reflecting investor concerns about the future competitive landscape in the budget airline sector.