American airline Spirit Airlines and Frontier Group Holdings, Frontier Airlines' parent company, have declared their intention to merge.
According to media sources, the $6.6 billion deal would establish the fifth largest airline in the United States, after American Airlines, Delta Airlines, Southwest Airlines, and United Airlines. According to a joint statement made on Monday, the two airlines' management aspires to create the most competitive ultra-low-cost carrier in the United States and expand operations in the coming years.
Based on current networks, the merged airline would increase service to neglected small and mid-sized communities across the United States, covering over 145 destinations in the United States, Latin America, and the Caribbean. With 350 aircraft on order currently, the new airline plans to generate 10,000 direct employment by 2026. Once fully integrated, the merger is estimated to provide annual operational synergies of $500 million on a run-rate basis.
According to the statement, the new airline will have annual sales of roughly $5.3 billion based on 2021 results and a superior financial profile with a combined cash balance of around $2.4 billion by the end of 2021. Nonetheless, according to the latest operating data released on Monday, both Spirit Airlines and Frontier Airlines incurred yearly losses from 2020 through 2021, with expenses exaggerated in 2021.
According to the press release, both firms' boards of directors have accepted the merger, which is slated to close in the second half of 2022. The merged company's board of directors will be chaired by William A. Franke, the chairman of Frontier's board of directors. A committee overseen by Franke will decide on the merged company's management team, branding, and headquarters before the acquisition closes, according to the announcement.
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