Spirit Rejects Third Frontier Takeover Bid, Focuses on Bankruptcy Exit
Spirit Airlines has once again denied a takeover offer from low-cost carrier Frontier, prioritizing its independent bankruptcy reorganization plan.
Frontier's latest bid mirrors its previous proposal, offering Spirit shareholders $400 million in debt and a 19% stake in Frontier Group Holdings Inc.
"While we believe a Spirit-Frontier merger would maximize value, we remain disciplined acquirers and prioritize Frontier shareholder returns in a positive market environment," Frontier stated.
Spirit swiftly declined Frontier's offer last month, proposing a counterproposal that was subsequently rejected. A court hearing is scheduled for Thursday to discuss Spirit's reorganization plan, which it expects to finalize in Q1.
Frontier's initial merger attempt in 2022 was unsuccessful due to a higher bid from JetBlue. However, the Justice Department intervened, blocking JetBlue's $3.8 billion deal over concerns of higher fares for Spirit customers. A federal judge supported the department's decision, leading JetBlue and Spirit to withdraw their merger proposal in March.
As the largest US budget airline, Spirit filed for bankruptcy protection in November after negotiating agreements with bondholders. Since early 2020, Spirit has lost over $2.5 billion and faces upcoming debt obligations exceeding $1 billion in 2025 and 2026.
Following the announcement, Frontier Group shares dropped 3% prior to market open on Wednesday.