Spirit has rejected yet another merger offer from Frontier as the carrier plans to go forward with restructuring.
A Spirit A320neo (Photo: AirlineGeeks | William Derrickson)
Spirit announced Wednesday that it has rejected Frontier’s most recent offer to merge with the beleaguered ultra-low-cost carrier.
Frontier, which also tried to buy Spirit in 2022, tried to renegotiate a merger in late 2024 after Spirit filed for Chapter 11 bankruptcy.
But those talks fell through, and Frontier made another offer on Feb. 4. Per this deal, Frontier proposed issuing a $400 million principal amount of debt and 19% of its common equity to holders of Spirit’s secured notes.
Frontier CEO Barry Biffle said the airline stood “ready to engage” with Spirit regarding that offer during Frontier’s fourth-quarter earnings call on Friday.
Spirit stated in an update to investors Wednesday that Frontier’s new proposal “did not address certain material risks,” and it would deliver less value to Spirit’s stakeholders than its original reorganization plan.
The carrier added that it had concerns about timing, completion, increased costs, and regulatory uncertainties. After meeting with stakeholders last week, Spirit submitted a counterproposal to Frontier on Friday.
The counterproposal would also require Frontier to pay a $35 million termination fee that would otherwise be owed by Spirit under its Backstop Commitment Agreement.
On Monday, Frontier rejected the counterproposal and reiterated its original Feb. 4 proposal.
“Spirit will continue swiftly to advance and conclude its restructuring process, which will significantly deleverage the Company and position it for long-term success,” Spirit stated in its update to investors.
The hearing to consider confirmation of Spirit’s plan of reorganization is scheduled for Thursday morning. Spirit stated it expects to complete its restructuring in the first quarter of 2025.
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