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Spirit Airlines & Frontier Airlines Reportedly Renew Merger Talks Amidst Bankruptcy Rumors
November 8, 2024
Spirit Airlines is keeping merger hope alive as the struggling discount airline has reportedly renewed merger talks with fellow discount carrier Frontier Airlines.
According to Simple Flying, only a few months after the Department of Justice officially halted JetBlue’s almost $4 billion acquisition of the discount airline in March, Spirit Airlines has allegedly started discussing the potential of another merger with rival ultra-low-cost carrier Frontier Airlines.
This isn’t the first time the two companies sat down to talk about the potential of a merger: Spirit and Frontier first explored the possibility of acquisition back in February 2022, but JetBlue beat Frontier to the punch with its much larger financial war chest.
Despite having similar operational models, Spirit Airlines and Frontier Airlines serve slightly distinct markets. Spirit has long prospered as a leisure airline by linking cities in the Eastern and Midwestern United States with sunny holiday spots in the American South, Mexico, and the Caribbean. Although the airline’s route network has changed since then, remnants of this first model may still be found in the airline’s current operational base network.
Spirit Airlines’ ‘Hail Mary’ Pass
Should the reported merger talk between the two airlines fail, there is a strong possibility that Spirit will, indeed, file for bankruptcy.
According to Investor’s Business Daily, Spirit has about $3.1 billion in debt, including $1.1 billion in secured bonds that are set to mature in less than a year. Additionally, before the end of October, the airline’s credit card processor asked that these bonds be extended or refinanced.
In addition to the debt, Spirit is having trouble turning a profit. In addition to the $143 million drop for the first quarter of 2024, the corporation also lost $193 million during the second quarter of that year.
“Significant industry capacity increases together with ancillary pricing changes in the competitive environment have made it difficult to increase yields, resulting in disappointing revenue results for the second quarter of 2024,” said Spirit’s CEO Ted Christie in the company’s earnings release at the start of August.
According to numerous financial specialists, the airline may be on the verge of going bankrupt if it does not drastically and drastically reduce its operations, which would undoubtedly hurt passengers and lessen market competition, per Travel + Leisure.
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