Third Time’s the Charm? Frontier Wants to Merge With Spirit, Again

Frontier Airlines is making another attempt to merge with Spirit Airlines, marking its third effort in this endeavor.

The union between the ultra-low-cost airlines, which was scuttled 2 years ago and then fizzled again in late 2024, is being discussed again after Frontier sent Spirit a new proposal on Wednesday.

Spirit rejected the proposal, but said it was open to a higher offer.

The difference with the previous merger attempts is that Spirit is in bankruptcy protection and is restructuring its business to hopefully emerge as a profitable company.

Let’s take a look at what we know and what we’d like to know about the potential revival of the Frontier-Spirit merger.

Spirit Rejects Frontier’s New Proposal, but Wants to Negotiate

Frontier Group, the parent company of Frontier Airlines, said on Wednesday that it sent Spirit a new proposal to merge in exchange for newly issued Frontier bonds and stock.

According to Frontier, this would be a better deal for Spirit’s bondholders and shareholders than what they would get under the current plan to exit bankruptcy.

Spirit refused the offer a few hours later, according to the New York Times, but said it was open to negotiating with Frontier.

Frontier’s offer was for $2.1 billion in stock and cash for Spirit.

Spirit said it had rejected the offer because it was less than the $2.9 billion merger that the airlines had agreed to in 2022, before Spirit shareholders went with a higher offer from JetBlue (which was later blocked by a federal judge.)

While calling Frontier’s offer “both inadequate and unactionable,” Spirit management said they “would be happy to consider” another one.

According to the Wall Street Journal, Spirit’s plan is to give creditors $840 million in secured notes; they would then own all of the restructured Spirit. Frontier proposes, instead, to give them less than half in notes, $400 million, and 19% of the combined Frontier-Spirit airline. This, according to Frontier, would be more valuable than owning all of the post-bankruptcy Spirit.

Spirit Flies While Bankrupt, Tries Upscale Strategy

Meanwhile, Spirit has been operating under bankruptcy protection since November of last year. The Fort Lauderdale-based carrier filed for Chapter 11 protection after the second attempt to merge with Frontier failed when the airlines could not agree on terms.

At that point, Spirit — known for its rock-bottom fares and bare-bones service — had already been trying to position itself as a more upscale airline by eliminating change and cancellation fees.

After entering bankruptcy, Spirit devised a plan called “Enhancing the Guest Experience,” which it said would allow it to return to profit.

Essentially, the aim is to operate more like a legacy airline. This involves selling 4 different fare types: Basic, Standard, Premium Economy, and BFS (“Big Front Seat” with more legroom).

Frequent flyers and those who paid higher fares get a separate check-in and priority boarding, and everybody gets free water and a snack. Those things used to be unthinkable to the old way Spirit did business, focused on just the lowest possible fare.

Frontier’s new proposal to merge does not make it clear, as far as we know, whether a merged airline would keep any part of those plans.

Frontier-Spirit: The Fifth-Biggest U.S. Airline

The union of Frontier and Spirit would create a giant: the fifth biggest airline in the U.S. by passengers carried. A Frontier-Spirit merger would mean they would be behind only American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. However, it would rank ahead of the merged Alaska Airlines and Hawaiian Airlines.

The 2 ultra-low-cost carriers (ULCCs) almost became 1 for the first time in 2022, when Spirit shareholders approved a bid from Frontier to buy the airline at a valuation of $2.9 billion. JetBlue, which was also looking to grow to better compete with the much bigger legacy carriers, swooped in with an offer that valued Spirit at 30% more. The Frontier merger did not happen, as shareholders went for the JetBlue offer instead.

Neither did the merger with JetBlue, for that matter. The Justice Department sued to block the merger on the grounds that, if JetBlue bought Spirit and charged its own higher prices, consumers would be harmed. Earlier this year, a federal judge agreed and blocked the deal, saying that it would hurt flyers who rely on Spirit’s low fares.

It’s less likely that federal regulators would see a Frontier-Spirit merger as negatively. Both are ultra-low-cost carriers, offering a bare-bones experience for lower prices than legacy airlines. It’s harder to argue that their merger would result in higher prices.

What Would Happen to Loyalty Programs and Big Front Seats?

Airline mergers typically result in 2 brands becoming one. See Alaska-Virgin America, United-Continental, Delta-Northwest, and many more.

Rarely do merged entities remain separate brands, which will be the case with the upcoming union between Alaska Airlines and Hawaiian Airlines.

Since the ultra-low-cost model relies on economies of scale, it may be more likely that there will be only 1 brand resulting from a Frontier-Spirit merger, including a unified passenger experience. That raises the question of what would happen to the feature that makes Spirit stand out among its low-fare peers, the Big Front Seat.

While Spirit does not have first class, it has those larger seats at the front of the plane, offering a lot more legroom with the same bare-bones experience. Frontier has no comparable product. Would a merged airline keep the Big Front Seat or axe it in favor of 1-size-fits-all like European low-fares giant Ryanair?

And would the 2 loyalty programs, Free Spirit and Frontier Miles, be rolled into 1, like Alaska and Hawaiian say they will eventually do with theirs?

Final Thoughts

Frontier Airlines is once more attempting to acquire Spirit. The airlines have nearly merged on 2 separate occasions in the past.

If Frontier succeeds in buying Spirit, it will create the fifth largest airline in the U.S.

There would be a new low-cost airline giant in the market, competing with the legacy carriers as a much bigger player — a development that may result in price battles benefiting flyers.