Frontier is buying Spirit Airlines in $3B deal
The deal will create the nation’s fifth-largest carrier
Frontier is buying Spirit Airlines in a $3 billion deal to create the nation’s fifth-largest carrier.
|ULCC||FRONTIER GROUP HOLDINGS||8.28||+0.04||+0.55%|
|SAVE||SPIRIT AIRLINES INC.||15.24||+0.04||+0.26%|
The combination will raise competition and give travelers more options to fly to mid-sized cities as well as regions that are underserved, according to the companies.
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"This transaction is centered 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" said Spirit CEO Ted Christie.
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|LUV||SOUTHWEST AIRLINES CO.||29.28||-0.59||-1.98%|
|AAL||AMERICAN AIRLINES GROUP INC.||14.74||-0.04||-0.24%|
|UAL||UNITED AIRLINES HOLDINGS INC.||47.60||+0.14||+0.28%|
|DAL||DELTA AIR LINES INC.||36.52||+0.17||+0.45%|
The cash and stock deal, on a combined basis, will produce annual revenues of $5.3 billion and synergies of $500 million once the deal is complete.
Existing Frontier shareholders will own approximately 51.5% and existing Spirit stockholders will own approximately 48.5% of the combined airline. The transaction is expected to close in the second half of the year.
Spirit shareholders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on Friday.
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The deal comes as many airlines, including Spirit and larger carriers such as American and Southwest, are experiencing tougher staffing issues producing delays and canceled flights that can last for days.
The Associated Press contributed to this report.