Renewed Frontier-Spirit Volley Ends In No Deal

A third acquisition offer from Frontier Airlines has been rejected by Spirit Airlines after an unsuccessful counter, concluding that it would deliver less in value than its standalone restructuring plan.

The revised proposal from Frontier held firm on a prior offer of 19% equity in the combined company and $400 million of take-back debt—terms Spirit rebuffed in late January—but its revision would not have required Spirit to complete a $350 million equity rights offering, the deadline for which has been pushed twice. Its latest bid also assumed a waiver of the $35 million break-up fee that would otherwise be owed for terminating the equity rights offering.

Remaining unimpressed with the terms of the deal, Spirit also feared it could result in longer and more costly chapter 11 proceedings, while citing uncertainty on necessary regulatory and court approvals. This time around it countered, asking Frontier to pay the break-up fee and commit to a reverse termination fee should a merger fail for regulatory reasons. It also sought to raise the take-back debt to $600 million and equity to $1.185 billion, the aggregate value of which it said was “equal to the amount of value that Frontier claimed it was providing to Spirit stakeholders” under its new proposal.

“As you and your team are well aware, time is of the essence as we speedily approach confirmation of our standalone plan this Thursday,” Spirit CEO Ted Christie wrote in offering the counter.

Frontier has previously warned that, should Spirit pursue its current standalone plan, it could be “some time” before it would consider re-engaging, if at all. It rejected Spirit’s counterproposal on Feb. 10.

“As we advised you when we sent our last proposal, eliminating the $350 million equity rights offering was a significant concession, and we would not agree to materially alter any of the other commercial terms of our proposal,” Frontier CEO Barry Biffle and Chairman Bill Franke wrote in a letter disclosed in new filings. “As compared to your standalone plan, we remain of the view that this represents a superior proposal to your various stakeholders.”

A bankruptcy court hearing to confirm Spirit’s plan of reorganization remains scheduled for Feb. 13. Approximately 99.99% of all voting creditors have voted to accept the plan, Spirit notes, with all but two objections resolved. “Spirit will continue swiftly to advance and conclude its restructuring process, which will significantly deleverage the company and position it for long-term success,” it writes.

Confirming no agreement had been reached “in relation to the structure, value or terms of a transaction,” Frontier also underlined Spirit’s intent “to advance and conclude its standalone restructuring process in lieu of a transaction.” 

It is the latest chapter in a saga that stretches back to 2022, when an initial merger agreement between the two ULCCs was shuttered by a bidding war with JetBlue Airways. Once a JetBlue-Spirit deal was blocked on antitrust grounds, the budget carriers resumed their conversations in summer and fall 2024, reaching an agreement in principle that would have offered Spirit stakeholders 26.5% of the equity of the combined company, and $580 million of take-back debt. Frontier chose not to move forward, and Spirit filed for chapter 11. Frontier returned to the table for talks in early January, but a reduced offer was described by Spirit as “both inadequate and unactionable” and the airline declined without counter while inviting a revised proposal.

Biffle told investors on a recent earnings call that Frontier was prepared to move quickly to make a deal happen.

As back-and-forth conversations between the two have taken place over the last several weeks, some analysts have reacted with surprise to Spirit’s rejection of Frontier. Though remaining apart on the economics of the offer, both carriers appear to agree on the underlying logic of a deal, observes recent analysis from Raymond James, viewing a merger between the two as the best long-term option for all constituents.

“We are not alone in being skeptical of Spirit’s standalone plan,” analyst Savanthi Syth wrote in a Jan. 30 report, “and believe that if proposed initiatives do not bear fruit soon and current trends hold, the possibility of a Chapter 7 filing in 2026 is no longer unthinkable.”