Spirit Airlines Rejects Latest Frontier Merger Bid - Advances Solo Restructuring, and More
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Spirit Airlines Charts Independent Course After Dismissing Third Frontier Takeover Attempt
Spirit Airlines has firmly rejected Frontier's latest acquisition proposal worth $2.16 billion, which offered $400 million in second-lien debt and a 19% equity stake.
The rejection comes as Spirit moves forward with its standalone restructuring plan, with a crucial reorganization hearing scheduled for tomorrow, February 13, 2025.
Spirit's management believes Frontier's proposal would deliver less value to stakeholders and create more uncertainty compared to their current reorganization strategy.
Key Points
- Frontier Airlines submitted the proposal on February 4, dropping the requirement for Spirit's $350 million equity rights offering and requesting a waiver of the $35 million termination fee
- Spirit countered on February 7 with a proposal for $600 million in debt and $1.185 billion in equity, which Frontier rejected on February 10
- Nearly 99.99% of Spirit's voting creditors have approved the current restructuring plan, with only two objections remaining unresolved
- Spirit expects to complete its restructuring process by the end of Q1 2025
- This marks the third failed merger attempt involving Spirit Airlines since 2022, following JetBlue's intervention and subsequent regulatory blockage
What It Means
I believe this rejection marks a definitive end to years of merger attempts between these two ultra-low-cost carriers.
The focus now shifts to Spirit's standalone recovery strategy, which could offer a clearer path to financial stability.
While consolidation could have created a stronger competitor, I expect Spirit's debt reduction through restructuring will position it better in the budget airline market (regarding the current scenarios).
