Frontier and Spirit airlines are merging in a deal that the companies say will create America's most competitive ultra-low fare airline.
The parent company of Frontier Airlines is buying Spirit Airlines in a $2.9 billion cash-and-stock deal that will create the nation's fifth largest carrier, according to the Associated Press.
The deal is valued at $6.6 billion when accounting for the assumption of debt and other liabilities, the AP reported.
The companies said Monday that their goal is to provide more low-cost fares to destinations in the U.S., Latin America, and the Caribbean.
The airlines said joining forces as one will empower it to accelerate investment in innovation and growth and compete even more aggressively against the dominant "Big Four" airlines -- American, Delta, Southwest and United.
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"This transaction is centered around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public," Ted Christie, President and CEO of Spirit, said in a statement.
The combined airline is expected to offer more than 1,000 daily flights to over 145 destinations in 19 countries. The airline will also expand its fleet with more than 350 aircraft.
The companies expect all current employees to have an opportunity to be part of the new combined airline. By 2026, Spirit and Frontier also expect to add 10,000 direct jobs and thousands of additional jobs at their business partners.
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Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Spirit equity holders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on February 4, 2022.
Upon closing of the transaction, existing Frontier equity holders will own approximately 51.5% and existing Spirit equity holders will own approximately 48.5% of the combined airline.
The merger is expected to close in the second half of 2022.
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