Two Major Low-Cost U.S. Airlines Announce Merger Agreement

Low-cost carriers Spirit and Frontier Airlines could soon become one if a proposed merger is approved by federal antitrust regulators.

The airlines announced plans Monday to merge in a $2.9 billion deal that would create the nation’s fifth largest airline. The combined carrier would trail only Delta, American, United, and Southwest Airlines in number of miles flown, if their current flight schedules were to remain intact.

The name of the merged airline has not been determined, or even whether both would continue to fly under their current names. The two combine for more than 1,000 daily flights, have a fleet of more than 300 planes, and fly to 145 destinations in the United States, the Caribbean, and Latin America.

“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,” said Spirit CEO Ted Christie, according to CNN.

“Together, Frontier and Spirit will be America’s greenest airline and deliver more ultra-low fares to more people in more places,” added Frontier CEO Barry Biffle.

Indigo Partners, an airline investor, may have played a major role in the deal. Indigo is a majority shareholder in Frontier and a former majority shareholder in Spirit.

Indigo founder and managing partner Bill Franke will be chairman of the combined airline should the merger go through. Franke is also the former CEO of America West Airlines.

“I think it’s safe to say that no one knows them better than I do,” Franke said during call announcing the deal, USA Today reported. 

Whether the deal will pass muster with federal regulators is another story. They recently scuttled an alliance — not even a merger — between American Airlines and JetBlue. The Biden administration has made competition in the airline industry a priority, CNN reported.

“This is the type of transaction the administration should in fact support,” Franke told CNBC. “It’s beneficial to the consumers. It’s beneficial to the employees. It’s beneficial to the communities that the airlines serve. And at the end of the day, even in combination, these two airlines will control less than 10 percent of the market.”

Officials for the airlines believe the merger will create thousands of new jobs. They expect to add 10,000 jobs internally, in addition to thousands more with suppliers and other companies.

More details of the merger are yet to be worked out, including where the airline would be based. Frontier is headquartered in Colorado, while Spirit is in Florida.

If all goes smoothly with federal regulators, airline officials expect the deal to be complete by the second half of 2022.

For more travel news currently developing, see our recent coverage: