Bankrupt Spirit Airlines Rejects Frontier's New Offer, Eyes Q1 2025 Restructuring

Spirit Airlines, the budget carrier that filed for bankruptcy in November 2024, has rejected Frontier Group Holdings' latest acquisition offer. The airline, which has been grappling with financial losses and a substantial debt load, is now focusing on finalizing its standalone restructuring plan by the first quarter of 2025. Frontier's offer, valued at around $2.16 billion, was deemed inadequate by Spirit's management and board of directors, who believe that the airline's existing plan of reorganization would deliver more value to stakeholders.



Frontier's proposal, submitted on February 4, 2025, would have seen Spirit's stakeholders receive $400 million in second-lien debt issued by Frontier and a 19% stake in Frontier's common equity. However, Spirit's management and board, in consultation with external advisors, determined that the proposal provided less value than the existing plan of reorganization. Additionally, they expressed concerns about the uncertainty regarding timing and completion, the potential for extended and costly chapter 11 proceedings, and the uncertainties surrounding regulatory and court approvals.



Spirit's counterproposal, submitted on February 7, 2025, matched the total value claimed by Frontier but introduced a market-based mechanism for equity distribution and required Frontier to pay a $35 million termination fee. However, Frontier rejected Spirit's counterproposal and reaffirmed its original February 4 offer. Despite these developments, Spirit remains committed to swiftly advancing and concluding its restructuring process, with a confirmation hearing for its plan of reorganization scheduled for February 13, 2025. The company expects to complete the restructuring in the first quarter of 2025, with approximately 99.99% of all voting creditors in favor and only two objections remaining.



In conclusion, Spirit Airlines has rejected Frontier's latest acquisition offer, opting to proceed with its standalone recapitalization plan. The airline's management and board of directors are focused on mitigating risks and ensuring a successful restructuring process by addressing material risks and issues, swiftly advancing and concluding the process, and positioning the company for long-term success. As Spirit works towards finalizing its restructuring by the first quarter of 2025, investors and stakeholders await the outcome of the confirmation hearing and the potential implications for the airline's future.