Spirit Rejects Yet Another Advance From Discount Rival Frontier

Spirit Airlines, Inc. (SAVEQ) has once again rebuffed an advance from discount rival Frontier Airlines, Inc. (ULCC), opting to proceed with its standalone bankruptcy restructuring plan. The decision, announced on February 11, 2025, comes after Frontier submitted a new proposal on January 7, 2025, offering Spirit's stakeholders $400 million in second-lien debt issued by Frontier and 19.0% of Frontier's common equity following the proposed combination.



Spirit's management and board of directors, in their fiduciary duties, carefully reviewed Frontier's new proposal and found that it would deliver less in value to the company's stakeholders than the existing plan of reorganization. In a letter dated January 28, Spirit executives stated, "While we appreciate your continued interest and share your view of the logic of a potential transaction, your January 7 terms... are both inadequate and unactionable." Spirit's board directed management and advisors to proceed with the confirmation of its extremely efficient standalone reorganization that will position the company well for the future.



Spirit's decision to proceed with its current plan was influenced by several factors, including inadequate and unactionable terms, uncertainty and extended bankruptcy proceedings, and the company's confidence in its standalone reorganization plan. Approximately 99.99% of all voting creditors have voted to accept the plan, and all but two objections have already been resolved.

Frontier's proposal, while offering a higher recovery for Spirit's stakeholders than its standalone restructuring plan, still had "many deficiencies" and raised concerns about the timing and successful completion of the deal. Spirit's management and board were also mindful of the potential hurdles and uncertainties regarding needed regulatory and court approvals.

In conclusion, Spirit Airlines' rejection of Frontier's latest merger offer aligns with the company's long-term goals and risk management strategies, as it prioritizes the value to stakeholders, minimizes uncertainty, and maintains confidence in its standalone reorganization plan. As the airline industry continues to evolve, with consolidation and mergers playing a significant role, Spirit and Frontier will need to adapt their strategies to remain competitive and successful.