Frontier again proposes to acquire Spirit

Spirit Airlines revealed on Wednesday that Frontier Airlines has proposed to combine the airlines in a debt-and-stock deal, but Spirit has rejected the offer.

Spirit said in a regulatory filing that Frontier’s proposal “would deliver less in value to the company’s stakeholders” than its existing plan to restructure the airline. Spirit filed Chapter 11 last November.

In Frontier’s offer, Spirit debtholders would receive $400 million in new debt issued by Frontier, plus 19% of Frontier’s common equity. Also, the proposal also would require Spirit debtholders to complete a new $350 million equity investment, as outlined in Spirit’s restructuring plan announced in November.

Under Spirit’s restructuring agreement, debtholders would convert $795 million of debt into Spirit equity while committing to a new equity investment of $350 million. In addition, debtholders would provide a $300 million loan to bolster Spirit’s cash position. 

Frontier also published a regulatory filing on Wednesday about the Spirit proposal but did not acknowledge that Spirit rebuffed it.

“No agreement has been reached between the parties in relation to the structure, value or terms of a transaction,” Frontier said. “There is no assurance that these discussions will result in a transaction. The company does not currently intend to comment further on the potential transaction with Spirit unless and until a definitive agreement has been reached or as it determines is otherwise required by law.”

In 2022, when Spirit wasn’t in Chapter 11, Frontier offered to acquire Spirit for $2.9 billion in cash and stock. That deal fell by the wayside when Spirit shareholders opted for a higher offer from JetBlue. The Justice Department blocked the JetBlue-Spirit deal last January, and the airlines dropped their appeal of the ruling last March.

A bankruptcy court hearing to approve Spirit’s restructuring plan is scheduled for Feb. 13. Spirit continues to expect to exit Chapter 11 by the end of March.