Spirit Airlines rejects Frontier’s second merger bid
Spirit Airlines has rejected Frontier Airlines’ second merger bid as it focuses on emerging from bankruptcy. Spirit filed for bankruptcy last year after its proposed merger with JetBlue was blocked by the justice Department. Frontier had previously offered a merger deal of $2.9 billion, but Spirit considered that offer inadequate following JetBlue’s counter proposal. Recently, Frontier announced a second offer involving $2.1 billion in stock and cash, emphasizing that a merger would enhance operational efficiency and customer service. However, Spirit’s management declined this latest offer, expressing a commitment to their standalone reorganization plan while remaining open to revised proposals from Frontier. Spirit is expected to complete its bankruptcy reorganization in the frist quarter of this year.
Spirit Airlines plays hardball with Frontier’s second merger bid despite bankruptcy
Spirit Airlines rejected Frontier Airlines’s second merger bid, opting to continue on its current path to emerge from bankruptcy.
The low-cost airline filed for bankruptcy last year after the Justice Department blocked a proposed merger with JetBlue. Before JetBlue’s offer, Frontier offered a $2.9 billion merger deal to Spirit, which the airline appeared likely to take until JetBlue countered. Frontier publicly announced a second offer to merge with Spirit in a press release Wednesday.
“While we are pleased with the strong results Frontier has been able to deliver through the execution of our business strategy, we have long believed a combination with Spirit would allow us to unlock additional value creation opportunities,” Frontier CEO Barry Biffle said in a statement announcing the offer. “As a combined airline, we would be positioned to offer more options and deeper savings, as well as an enhanced travel experience with more reliable service.”
Frontier offered to pay $2.1 billion in stock and cash to merge with the other low-cost carrier, and executives wrote in a letter to Spirit’s CEO and chairman that they believed that if the airline goes forward with its emergence from bankruptcy, Spirit will be “highly levered” and “losing money at the operating level.”
Spirit executives declined Frontier’s offer in a letter but said they would remain open to additional offers from the other airline for a deal.
“While we appreciate your continued interest and share your view of the logic of a potential transaction, your January 7 terms (which have not been improved on in the last three weeks) are both inadequate and unactionable,” reads the Spirit letter, included in an FEC filing Wednesday. “In light of the above, our Board has directed management and advisors to proceed with confirmation of our extremely efficient standalone reorganization that will position us well for the future.”
“Should you wish to make a revised proposal that is in fact capable of closing, and addresses the material deficiencies catalogued here and in our many communications, we would be happy to consider it and again work to activate our stakeholders to do so as well,” it continues.
Spirit is expected to emerge from Chapter 11 bankruptcy reorganization in the first quarter of this year, pending the result of a hearing next month. The airline is one of the most famous names among low-cost carriers, but it has run into financial troubles in recent years.
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