Mon, February 7, 2022, 6:49 AM·2 min read
FILE PHOTO: A Spirit Airlines A320-200 airplane sits at a gate at the O'Hare Airport in Chicago, Illinois
FILE PHOTO: A Frontier Airlines Airbus A320neo plane departs from O'Hare International Airport in Chicago
1 / 2
Frontier to buy Spirit Airlines in $2.9 billion low-cost carriers deal
FILE PHOTO: A Spirit Airlines A320-200 airplane sits at a gate at the O'Hare Airport in Chicago, Illinois
In this article:
SAVE
+13.43%
(Reuters) -Budget carriers Frontier Group Holdings and Spirit Airlines Inc on Monday unveiled plans to merge in a $2.9 billion deal that would create the fifth-largest U.S. airline and tighten competition against traditional carriers.
The tie-up combines stablemates of legendary airline investor Bill Franke, a pioneer of rock-bottom fares coupled with top-up charges offered by ultra low-cost carriers (ULCC).
Such airlines are a tier below Southwest Airlines, which pioneered the low-cost concept in the 1970s, and have continued to expand during the COVID-19 pandemic at the expense of larger rivals.
- ADVERTISEMENT -
The companies expect the cash-and-stock deal to accelerate investment and help take on major U.S. airlines like American Airlines Group, Delta Air Lines, Southwest Airlines and United Airlines Holdings.
[Stay ahead of the market]
Shares of major U.S. airlines rose between 1.3% to 1.8% in premarket trade.
The Frontier-controlled business is seen adding 10,000 direct jobs by 2026, the companies said, adding that they expect to deliver $1 billion in annual consumer savings and offer more than 1,000 daily flights to over 145 destinations.
The transaction value of the deal is $6.6 billion including the assumption of net debt and operating lease liabilities, the carriers said in a statement.
Colorado-based Frontier will own 51.5% stake in the combined entity, while the remaining 48.5% will be held by Spirit's shareholders.
