Frontier Airlines Acquires $ 3 Billion Low Cost Carrier and Spirit Airlines

Frontier Airlines will acquire Spirit Airlines in a $ 2.9 billion cash and equity transaction, creating the fifth largest airline in the country.

Considering debt and other debt underwriting, the partnership is valued at $ 6.6 billion.

The two companies said on Monday that the deal would provide lower cost fares to more travelers to destinations in the United States, Latin America and the Caribbean. Frontier Group Holdings Inc. And Spirit Airlines Inc. also anticipate $ 1 billion in consumer savings annually, aiming to expand their services by ordering more than 350 aircraft.

In addition, Frontier and Spirit are trying to add more work. The two companies predict that by 2026, they will add 10,000 direct jobs and thousands of additional jobs to their business partners.

“This transaction is an aggressive ultra-low fare that provides better service to guests, expands career opportunities for team members, increases competitive pressure and provides more consumer-friendly fares for flying people. Our focus is on creating competitors, “said Spirit CEO Ted Christie. Said in a prepared statement.

Carriers may be conducting a very close investigation by antitrust authorities.Biden administration Signaled a tougher line For mergers of large companies. Still, the airline is in a weakened position towards 2022, suffering from a catastrophic spread during the pandemic, despite US support.

Shareholders of the existing Frontier own about 51.5% and shareholders of the existing Spirit own about 48.5% of the combined airlines. The transaction is expected to close in the second half of the year. Still, approval from Spirit shareholders is required.

Spirit shareholders will receive $ 2.13 in cash for each of their existing Spirit shares, in addition to Frontier’s 1.9126 shares. This means that Friday’s frontier closing price of $ 12.39 is worth $ 25.83 per Spirit share.

The merged company is expected to generate approximately $ 5.3 billion in annual revenue based on last year’s results. Its board of directors includes seven members nominated by the Frontier and five members nominated by the Spirit. Frontier Chair William Franke will chair the merged company.

Denver-based Frontier shares fell 2.2% before Monday’s opening bell. Miami-based Spirit’s share surged 12.5%.