Frontier and Spirit plan to transform the industry for the better by offering more ultra-low tickets to more people in more locations across the United States, Latin America, and the Caribbean, including major cities and underprivileged towns
• Frontier will hold approximately 51.5 % of the merged firm
• Spirit shareholders will get 1.9126 shares of Frontier plus $2.13 in cash for each share
Frontier Airlines (NASDAQ: ULCC) and Spirit Airlines (NYSE: SAVE), the two largest low-cost airlines in the United States, have agreed to merge in a $6.6 billion agreement, establishing the country's fifth-largest airline.
Frontier and Spirit plan to transform the industry for the better by offering more ultra-low tickets to more people in more locations across the United States, Latin America, and the Caribbean, including major cities and underprivileged towns.
When the transaction is completed, Frontier will hold approximately 51.5 % of the merged firm, and its chairman, William Franke, will become chairman of the combined company's board of directors.
Spirit shareholders would get 1.9126 shares of Frontier plus $2.13 in cash for each share they own, for an implied value of $25.83 per share, a 19% premium over the value of Spirit shares on February 4, 2022, according to the businesses.
“We are thrilled to join forces with Frontier to further democratize air travel, said Ted Christie, President, and CEO of Spirit, in a statement.
“This transaction is centered around creating an aggressive ultra-low fare competitor to serve our Guests even better, expand career opportunities for our Team Members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public.”
The amalgamated operation would create 10,000 direct employments by 2026, as well as produce $1 billion in annual customer savings and offer more than 1,000 daily flights to over 145 locations, the companies said.
In addition to the transaction, both Spirit and Frontier reported their most recent quarterly results on Monday. The two low-cost carriers, like other airlines, said the Omicron variation harmed their fourth-quarter earnings.
Frontier's financial advisor is Citigroup Global Markets Inc while Spirit's financial advisors are Barclays and Morgan Stanley & Co. LLC.