Frontier Buying Spirit, Creating Fifth Largest Airline in Budget Carrier Merger

The companies say to expect more low-cost flights within US, to Caribbean, Latin America

Paul Hennessy | LightRocket | Getty Images

The parent company of the budget carrier Frontier is buying Spirit Airlines in a $2.9 billion cash-and-stock deal that will create the nation's fifth largest carrier.

The deal is valued at $6.6 billion when accounting for the assumption of debt and other liabilities.

The companies said Monday that the transaction will provide more low-cost fares for more travelers to destinations in the U.S., Latin America and the Caribbean. Frontier Group Holdings Inc. and Spirit Airlines Inc. also anticipate $1 billion in annual consumer savings and are looking to expand their services with more than 350 aircraft on order.

The carriers may be in for a very close look by antimonopoly regulators. The Biden administration has signaled a tougher line against big corporate mergers. Yet airlines have suffered a devastating stretch during the pandemic despite assistance from the U.S., and are in a weakened position heading into 2022.

Existing Frontier shareholders will own approximately 51.5% and existing Spirit stockholders will own approximately 48.5% of the combined airline. The transaction is expected to close in the second half of the year.

Spirit shareholders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on Friday.

Shares of Frontier, based in Denver, slipped almost 3% before the opening bell Monday. Shares of Spirit, based in Miami, jumped about 12%.

Beijing 2022 Winter Olympics

Watch all the action from the Beijing Olympics live on NBC

How Athletes Overcame Famous Olympic Wardrobe Malfunctions

Peng Shuai Emerges at Olympics, Gives Controlled Interview

Copyright AP - Associated Press
Contact Us