Two prominent budget carriers Frontier Airlines and Spirit Airlines announced plans to merge in a deal valued at $6.6 billion, a tie-up that would create the fifth-largest airline in the United States by revenue passenger miles.
The merger is intended to “create America’s most competitive ultra-low fare airline for the benefit of consumers.” Under this new agreement, Frontier would have a controlling stake of 51.5%, whereas Spirit’s shareholders will hold the remaining 48.5%.
William Augustus Franke, Indigo Partners’ managing partner, would be heading a 12 member board in the new airline. Out of 12 board members, seven would be from Frontier and five from Spirit. Previously, Mr Franke also served as chairman of Spirit between 2006 and 2013. However, the new low-cost carrier’s name, the CEO, and the base have not been announced yet.
“This transaction is centered around creating an aggressive ultra-low 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. We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent guest service.”Ted Christie, President and CEO of Spirit.
Both carriers’ Boards and senior management team approved the deal over the weekend, and the merger is expected to be completed in the second half of the year. The budget carrier expects to save $1 billion a year in consumer savings.
The new low-cost carrier is expecting to add 10,000 direct jobs by 2026, and it would be offering more than 1,000 daily flights to over 145 destinations, mainly within the United States. With an all-Airbus fleet, it will also provide flights in Latin America and the Caribbean.
“Together, Frontier and Spirit will be America’s Greenest Airline and deliver more ultra-low fares to more people in more places. I couldn’t be more excited for our team members, customers, partners, the communities we serve and our shareholders.”Barry Biffle, President and CEO of Frontier.
Both the carriers say this merger will allow them to sell cheaper tickets. As reported by the New York Times, the average price of a domestic ticket sold by Spirit was $109, whereas the average price was $73 for Frontier, before taxes and fees, in November last year.
According to a joint press release, the new airline would have approximately $5.3 billion annual revenues based on 2021 results.
It is also interesting to note Frontier Airlines is currently having an operations meltdown, zero Frontier aircraft are in the air at the moment.
Cover Photo via Twitter/@SpiritAirlines