Frontier Group & Spirit Airlines to become a single entity worth $6.6 billion

The combined operation would have annual revenue of approximately $5.3 billion based on 2021 results.

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Frontier Group Holdings Inc. is all set to acquire Spirit Airlines Inc. in a deal valued at $6.6 billion that connects two of the country’s largest low-fare carriers.

Under the merger agreement, Frontier equity holders would have control over 51.5 per cent of the merged company, and Frontier would name seven of 12 board members. The board would be chaired by William A. Franke, the chairman of Frontier and the managing partner of Indigo Partners. Spirit investors will obtain 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders a value of $25.83 per share, which is a 19% premium over the value of Spirit shares at the end of last week, the companies expressed.

“This transaction is centred around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public,” Ted Christie, president and CEO of Miramar, Fla.-based Spirit, said in a statement announcing the deal.

The reason for this merger is attributable to the travel industry as it continues to claw its way back toward pre-pandemic levels despite higher costs, labour shortages and disruptions caused by Covid-19.

In 2013, Spirit and Frontier had 2.8% of the revenue passenger miles flown by U.S. airlines, according to the Department of Transportation. By 2019, their combined market share had almost doubled to 5.4% while the four largest airlines in the U.S., American Airlines, Delta, United and Southwest, controlled 73.9% of revenue passenger miles

The combined operation would have annual revenue of approximately $5.3 billion based on 2021 results.