Key Takeaways:

• Frontier Airlines has submitted a bid to merge with the bankrupt Spirit Airlines.
• The proposal includes $2.1 billion in stock and cash but has been rejected by Spirit, which seeks better terms.
• This marks the second attempt by Frontier to acquire Spirit after a previous merger attempt failed in 2022.
• Spirit Airlines filed for bankruptcy in November 2024 after significant financial losses.
• Frontier aims to enhance the competitiveness of budget travel by combining the two airlines.

Frontier Airlines is attempting yet again to merge with Spirit Airlines, which is struggling financially and recently filed for bankruptcy protection. On January 7, Frontier proposed a deal worth approximately NY Times $2.1 billion in cash and stock. However, this latest offer has already been rejected by Spirit, which stated that the terms were “far short” of what its shareholders would expect and noted that it fell below a $2.9 billion merger previously discussed. Spirit, lacking confidence in the proposal, has decided to continue pursuing its own restructuring plans amid ongoing bankruptcy proceedings.

This situation arises following Spirit's previous attempt to merge with JetBlue Airways, which was derailed by legal issues when the Justice Department blocked the deal, citing potential price increases for consumers. Spirit Airlines has lost over $2.5 billion since the onset of the pandemic in 2020, necessitating its Chapter 11 filing as it faces substantial impending debt payments. Notably, the airline slashed jobs to manage costs even before chairing its recent bankruptcy declarations.

Frontier is still holding onto hope that discussions with Spirit’s board will lead to a successful transaction that would combine the two largest budget carriers in the U.S. Frontier's chair, Bill Franke, expressed optimism, calling the merger “a compelling opportunity” that could provide more long-term value than Spirit's current standalone plan. Both airlines have consistently promoted low fares coupled with numerous add-on charges.

While Spirit recognizes the potential of a merger, it has opted to prioritize its independent restructuring efforts as it navigates through these challenging times. The evolving landscape of budget airlines continues to show complexities as larger airlines encroach on Spirit’s market share by introducing their own low-cost travel options.

For more detailed information, refer to articles from CNN and AP News.