In a potential twist of events, Frontier Group Holdings Inc. (ULCC) is reportedly circling back to acquire Spirit Airlines Inc. (SAVE). This comes amidst Spirit’s ongoing negotiations with bondholders over a possible bankruptcy filing.
The two budget carriers have been in preliminary merger talks, but these discussions are still in their early stages and there’s no guarantee a deal will materialize. Sources close to the matter, quoted in The Wall Street Journal, suggest that a merger would likely be part of Spirit’s debt restructuring plan if they enter bankruptcy proceedings.
Spirit has been facing significant financial headwinds, particularly after its failed merger attempt with JetBlue Airways Corporation (JBLU) and years of mounting losses. The airline is currently exploring out-of-court options to stabilize its balance sheet, but the potential bankruptcy looming over Spirit has drawn Frontier’s interest.
The news of a potential merger arrives as Spirit’s stock performance has taken a hit. The airline’s shares dipped by 6.22% on Tuesday, likely due to profit-taking following a Monday rally. This rally was spurred by an extension of the company’s debt refinancing deadline. Earlier in October, Spirit revised its card processing agreement, extending the deadline for its 2025 notes and early maturity date. These moves followed ongoing negotiations with U.S. National Bank Association regarding Visa and MasterCard payments.
The potential acquisition of Spirit by Frontier highlights the volatile landscape in the airline industry. As Spirit navigates its financial challenges, the possibility of a merger with Frontier could provide a lifeline, though it remains uncertain if this deal will ultimately materialize.
