After a series of proposals and counterproposals, Spirit Airlines (NK, Fort Lauderdale International) has rejected Frontier Airlines’ latest merger attempt and “will continue swiftly to advance and conclude its restructuring process,” the company said in a statement on February 11.

The ultra-low-cost carrier, currently under Chapter 11 bankruptcy reorganisation, rejected Frontier Group Holdings’ revised acquisition offer, worth about USD2.16 billion, saying that the bid was less beneficial to shareholders than its ongoing plan.

Frontier’s proposal, submitted on February 4, offered Spirit’s shareholders USD400 million in debt and 19% of Frontier’s common equity following the merger. Additionally, it asked Spirit to drop a USD350 million equity rights offering and use the proceeds to retire its debtor-in-possession facility, and required the bankruptcy court-approved USD35 million termination fee to be waived.

Three days later, Spirit submitted a counterproposal that provided its stakeholders with the same total value (USD600 million in debt plus USD1.18 billion in equity) as Frontier’s proposal. However, Spirit suggested using market-based mechanisms to determine how much equity shareholders would receive in the newly merged company, instead of accepting a fixed amount of equity. It also eliminated the need for an equity rights offering but would require Frontier to pay the USD35 million termination fee.

On February 10, Frontier rejected the counterproposal in its entirety and reiterated the original new proposal. In a letter to Spirit’s chief executive, Ted Christie, its chief executive Barry Biffle said the company had made “a significant concession” eliminating the USD350 million equity rights offering and that it would “not agree to materially alter any of the other commercial terms of our plan.” Frontier believes that compared to Spirit’s standalone plan its offer “represents a superior proposal,” he added.

On the same day, Spirit submitted a revised proposed Confirmation Order to the United States Bankruptcy Court for the Southern District of New York. The court is set to review and approve Spirit’s reorganisation plan at a hearing on February 13.

The two airlines previously attempted to merge in 2022, but Frontier was outbid by a higher offer from JetBlue Airways (B6, New York JFK), which was ultimately blocked by a federal judge last year. Frontier made another takeover attempt last autumn, but talks collapsed before Spirit filed for Chapter 11.

If merged, Frontier and Spirit’s combined airline would become the fifth-largest in the United States, carrying 100 million passengers and operating over 400 aircraft within a few years, according to Frontier.

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