Spirit Airways mentioned Wednesday it has rejected a bid from rival Frontier Group because it was not favorable for the low-cost provider and expects to exit chapter within the first quarter.
Frontier provided Spirit shareholders $400 million in debt and a 19% stake in Frontier earlier this month, Spirit mentioned in a regulatory submitting.
The proposal implied a complete consideration of about $2.16 billion, Frontier mentioned in a letter to Spirit that was made public together with the submitting.
Extremely-low-cost carriers, which excelled at holding bills low and providing no-frills journey, have struggled for the reason that pandemic as vacationers choose to pay further for a extra snug journey.
“As a mixed airline, we might be positioned to supply extra choices and deeper financial savings, in addition to an enhanced journey expertise with extra dependable service,” Frontier CEO Barry Biffle mentioned in an announcement.
Analysts have mentioned a profitable merger with Frontier might set up a nationwide low cost airline extra able to attracting price-sensitive passengers.
However Spirit rejected the proposal as it will not present the anticipated shareholder worth and raised issues over the timing and profitable completion of the deal.
“We’re instructed they (advisors to Spirit’s bondholders) imagine your present proposal is so inadequate as to not advantage a counter,” Spirit CEO Ted Christie and board chair Mac Gardner mentioned in a letter to Frontier that was made public on Wednesday.
In 2022, Spirit Airways got here near a merger take care of Frontier however the talks have been halted in favor of JetBlue, which gained the bidding conflict for the airline.
Spirit and JetBlue needed to scrap that deal final 12 months, after a US decide blocked the merger on anti-competition issues.
The Florida-based airline declared chapter in November after grappling with extended intervals of economic losses, unsuccessful merger efforts and a considerable ranges of debt.
The airline mentioned it expects to finish its restructuring course of within the first quarter.
Frontier shares rose 6% to $8.24.