Frontier and Spirit Airlines have announced a plan to merge the two carriers into the 5th largest airline in the United States. If the definitive merger agreement is approved by competition regulators, the new combined airline would also be the largest ultra-low-cost carrier in the U.S.
The airlines presented the merger as a big win for consumers because it will not only drive an estimated $1 billion in annual savings that could be used for lower fares, but it will also enable the new airline to “more aggressively” compete against the likes of American, Delta and United Airlines.
Frontier Airlines is controlled by Indigo Partners, a private equity company that also owns Chilean ULCC JetSmart and has major stakes in Mexico’s Volaris and Europe’s Wizz Air. Indigo Partner says it drove the merger talks between Frontier and Spirit.
“We worked jointly with the Board of Directors and senior management team across both carriers to arrive at a combination of two complementary businesses that together will create America’s most competitive ultra-low fare airline for the benefit of consumers,” commented William A. Franke, managing partner at Indigo.
Mac Gardner, Chairman of the Board of Spirit claimed the two airlines made a “perfect fit” with complementary route networks and an all Airbus fleet.
In November, Indigo Partners stunned analysts at the Dubai Air Show when it announced a deal for 250 additional A321neo aircraft with Airbus. Frontier is due to receive 91 A321neos as part of the deal. Once delivered, the Indigo Partners fleet of A320 family aircraft will number 1,145.
Spirit has around 68 new Airbus jets still on order.
On Monday, Frontier and Spirit claimed the new combined airline would serve 145 destinations in 19 countries across more than 1,000 daily flights. Annual revenues for the new airline are estimated at $5.3 billion.
If approved, the deal is expected to close at some point in the second half of 2022. Frontier will get to name seven directors of the board, while Spirit will get to choose five. Franke will become Chairman of the board.
As yet, no decision has been made about other key executives or what the name of the airline will be.
