Frontier and Spirit to unite, forming fifth-largest airline in the U.S.
Key takeaways:
- Frontier Airlines and Spirit Airlines, the two biggest low-cost carriers in the U.S., have decided to combine, forming what would become the fifth-largest airline in the nation.
- The firm boards agreed on the contract over the weekend before the CEOs of both airlines declared the agreement in New York City.
- The deal, worth $6.6 billion, is structured with Frontier Airlines holding 51.5% of the united airline while Spirit will have 48.5%.
Spirit and Frontier merge:
Airlines and Spirit Airlines, the two biggest low-cost carriers in the U.S., have decided to join, forming what would become the fifth-largest airline in the nation. The boards of both firms backed the agreement over the weekend before the CEOs of both airlines declared the deal in New York City.
The deal, worth $6.6 billion, is structured with Frontier Airlines holding 51.5% of the combined airline while Spirit will keep the remaining 48.5%. Spirit investors will get 1.9126 shares of Frontier plus $2.13 in cash per Spirit share they hold. The firms state the agreement hints at a value of $25.83 for each Spirit share, which would be a 19% bonus over the worth of Spirit shares at the end of the previous week.
Still to be decided is the name of the merged carrier, who will be CEO and the site of the airline’s headquarters. The director of the latest airline will be Bill Franke, the current chair of Frontier and operating partner of its parent firm, Indigo Partners. In a release revealing the deal, Franke stated the mixed carrier “will form America’s most competitive ultra-low fare airline for the advantage of customers.”
For Franke, the contract is the latest in a career of creating investments in and overseeing low-fare airlines about the planet, including Spirit. From 2006 through 2013, Indigo Partners had a stake in Spirit, with Franke acting as chair of the airline ere he left when Indigo sold its place in the carrier. Indigo purchased Frontier Airlines from Republic Airways soon after that action for $145 million.