MW Frontier's stock slides 3% as Spirit rebuffs budget airline's takeover offer for a third time

By Ciara Linnane

Frontier reiterates view that combining makes more sense than Spirit going it alone

The stock of discount airline Frontier Group Holdings Inc. fell 3% early Wednesday after Spirit Airlines again rejected a takeover bid from the rival carrier and said it would go it alone as it emerges from bankruptcy.

It was the third time that Spirit (SAVEQ) has rebuffed a Frontier advance, after an offer in late January that involved Frontier issuing new debt and common stock. That was followed late Tuesday by another offer that would also extend to Spirit shareholders $400 million in debt and a 19% stake in Frontier's parent.

Spirit is still going through bankruptcy court after filing for Chapter 11 protection from creditors in November. That move came after Frontier walked away from a planned merger for a second time last fall.

"As compared to your standalone plan, we remain of the view that this represents a superior proposal to your various stakeholders," Frontier $(ULCC)$ said in a regulatory filing late Tuesday.

Spirit said that it had made its own counteroffer but that it was rejected by Frontier in its entirety.

"Spirit will continue swiftly to advance and conclude its restructuringprocess, which will significantly deleverage the company and position itfor long-term success," the airline said in a statement.

A hearing to consider confirmation of its plan of reorganization is planned for Thursday at 10 a.m. Eastern time. About 99.99% of all voting creditors have already voted in favor of the plan, and all but two objections have been resolved, said Spirit.

The airline is expecting the restructuring to be completed in the first quarter.

Spirit and other discount carriers have been struggling to compete with the major airlines since the coronavirus pandemic and have taken a new hit lately due to demand for premium travel.

In January, Delta Air Lines Inc. $(DAL)$ reported earnings and an outlook driven by premium demand, with premium outperforming main cabin by 6 6 points in the fourth quarter.

Premium, along with loyalty, accounted for 57% of 2024 total revenue, said Delta. The airline has beefed up its premium offerings in response and expects that to drive growth this year.

Network carriers are also getting a boost from a recovery in corporate travel and growth in Atlantic routes. That has left the low-cost airlines on the back foot as they have less exposure to those trends.

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Spirit's bankruptcy came after a period in which efforts to merge with Frontier, and before that JetBlue Airways Corp. $(JBLU)$, fell through. That forced it to lay off employees, scale back flights and sell some of its fleet.

See: Spirit Airlines files for bankruptcy after tumultuous period in which two attempted mergers fell through

Frontier's stock has gained 23% in the last 12 months, while the US Global JETS exchange-traded fund JETS has gained 29% and the S&P 500 SPX has gained 20.8%.

-Ciara Linnane

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February 12, 2025 09:18 ET (14:18 GMT)

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