Frontier Group Holdings Inc. has agreed to buy Spirit Airlines Inc. In a cash and stock deal that is valued at $2.9 billion. The deal will create a single dominant discount airline focused on better competing with larger, more luxury airlines.
Airlines that offer a discount flying experience have received significant success as consumers are seeking a more basic flying experience for domestic travel. Covid-19 has put a strain on airlines; however, cheap domestic flights have become increasingly more popular as the pandemic ends, leaving luxury flight struggling to find frequent customers.
Larger airlines such as American Airlines have become a growing competitor for customers seeking cheaper flights and have been focusing more heavily on catering to that customer base. Spirit’s President and Chief Executive Ted Christie stated that “this transaction is centered around creating an aggressive ultralow 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.”
The deal, which was announced on Monday, will result in Frontier owning 51.5% of the combined company with Frontiers Chairman William Franke becoming the chair of the combined company.
The result of the deal allowed for Spirit shares to rise by 12% and Frontier stock fell by 2%.
Source: Wall Street Journal
