Frontier Group’s recent bid aimed to provide Spirit’s shareholders with $400 million in debt and a 19% ownership in the merged entity. However, it omitted the condition requiring Spirit to complete a $350 million equity rights offering, previously part of the negotiations. Furthermore, Frontier requested a waiver of the court-approved $35 million termination fee, which added another layer of complexity to the proposal.
Despite these changes, Spirit Airlines determined that the offer did not sufficiently mitigate specific risks and concerns previously highlighted in past discussions. Consequently, Spirit countered with a proposal that involved $600 million in debt and $1.185 billion in equity for its shareholders, which Frontier subsequently dismissed.
Spirit Airlines, having declared bankruptcy last year, anticipates concluding its restructuring efforts in the upcoming first quarter. Historically, the two airlines have been engaged in merger talks since 2022, predating Spirit’s financial struggles that led to its bankruptcy filing.
Complicating matters, JetBlue Airways had intervened with an alternative offer, surpassing Frontier’s earlier proposals. Nevertheless, this deal fell through when a U.S. judge intervened, citing antitrust concerns, thus leaving the door open for Frontier Airlines to renew its acquisition efforts.
Spirit’s rejection of Frontier’s latest offer emphasizes their preference for the current restructuring plan. They believe that this approach better serves the interests of their shareholders and provides more stability during these challenging times.
Spirit Airlines remains committed to its independent restructuring plan, in light of the rejected Frontier proposal, aiming to navigate their financial recovery on their terms. As the airline industry faces ongoing challenges, Spirit’s strategic decisions will significantly impact its future trajectory.
