The low-cost airlines Frontier Airlines and Spirit Airlines want to merge to create the fifth largest airline in the United States by number of seats behind American, Delta, United and Southwest. A $6.6 billion deal that still has to go through competition regulators.
According to the agreement announced on February 7, 2022, Frontier Airlines Holdings will absorb its biggest rival in the context of a merger, and will control 51.5% of the new American specialist in low-cost flights whose future name, headquarters and location are unknown. leaders. Spirit Airlines is valued by the proposed transaction at $2.9 billion, with its financial obligations (debt, aircraft leases) representing an additional $3.7 billion; its shareholders will hold 48.5% of the capital of the new company. The agreement, unanimously approved by the two boards of directors, should be finalized in the second half of 2022, subject to obtaining the agreement of the competition authorities, but also of the shareholders of Spirit.
On paper, the resulting low cost promises annual revenue of $5.3 billion, savings of $1 billion a year, “new routes between underserved communities in the US, Latin America and in the Caribbean” (145 routes in 19 countries), a fleet expecting more than 350 deliveries “to allow even more very low fares”, more reliable service and an improved loyalty program. And by 2026, Frontier and Spirit hope to create “10,000 new direct jobs and thousands more with their partners”, with all current employees to be offered a position in the new structure with “better career opportunities and a better stability” in what will be “the most competitive low cost in the USA”. This first merger in the USA since 2016, when Alaska Airlines acquired Virgin America, should also lead to a single AOC (air operator certificate), but no date has been advanced.
Based at Denver airport, Frontier Airlines (subsidiary of Indigo Partners alongside Wizz Air, Volaris and JetSmart) carried 22.8 million passengers in 2019, before the Covid-19 pandemic. Employing some 3,000 employees at the time, it is at the head of a fleet of 111 Airbus single-aisle aircraft, and is awaiting the delivery of 74 additional A320neos and 168 A321neos. It offers more than 115 destinations.
Based in Fort Lauderdale, Spirit Airlines (whose shareholding is very fragmented) transported 34.5 million passengers in 2019. Employing more than 8,000 employees at the time, it has 175 Airbus single-aisle aircraft and expects 135 others including 31 A319neo, 75 additional A320neos and 26 A321neos. It offers more than 83 destinations.
William A. Franke, Chairman of the Board of Directors of Frontier and Managing Partner of Indigo Partners, the low cost company’s majority shareholder, said in a statement that Indigo “has a long history with Spirit and Frontier, and is proud to partner with them to create a disruptive airline. We have worked together with the board of directors and management team of both carriers to arrive at a combination of two complementary businesses that together will create America’s most competitive ultra-low-cost airline for the benefit of consumers.”
“We are thrilled to partner with Frontier to further democratize air travel,” added Spirit President and CEO Ted Christie. “This transaction is focused on creating an aggressive competitor at an ultra-low price to even better serve our customers, expand career opportunities for our team members and increase competitive pressure, which will result in more friendly rates. for the traveling public,” he added.
It should be noted that this announcement came just before the Frontier fleet was grounded due to a “technological failure”, resulting in the cancellation of 121 flights, or nearly a quarter of its flight schedule. The automation problem, which was blocking the deployment of the planes, was resolved quickly, and the return to normal operations was in progress last night.