Spirit Airlines and Frontier Airlines, in a surprising move, announced plans to merge to create the biggest Ultra low cost carrier (ULCC) in the United States.
Merger
Spirit Airlines and Frontier Airlines have announced plans to merge to create a single airline entity and “America’s most competitive ultra-low fare airline”. According to them, the pairing would mean $1 billion worth of savings for future passengers. The new airline would remain under the Indigo Partners umbrella, where Frontier Airlines sits today. The airlines will go from competing against one another to sharing each other’s potential passengers.
The airlines state that “the stronger financial profile of the combined company will empower it to accelerate investment in innovation and growth and compete even more aggressively, especially against the dominant “Big Four” airlines (United, Delta, American and Southwest), among others.
How will the new airline work?
You may have the question that if Spirit and Frontier merge, how will the new airline work? Well, Frontier’s equity holders will own around 51.5% of the new venture, while Spirit’s equity holders will own approximately 48.5%. Frontier’s largest shareholder, Bill Franke is the Managing Partner of Indigo Partners. He will go on to be the Chairman of the Board for the new airline. The board will have 12 members, 7 from Frontier and 5 from Spirit.
If you combined the available seat miles of both airlines for 2021, the new entity would’ve been larger than JetBlue and Alaska Airlines. And both were already larger than Allegiant.
The merger deal is set to be closed in the second half of this year, assuming that everything goes to plan. While the airlines have not announced what the new name, brand, and headquarters will be, everything will be announced before the deal is closed.
Ted Christie, President and CEO, Spirit Airlines, said:
We are thrilled to join forces with Frontier to further democratize air travel. 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. We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent Guest service.
Mac Gardner, Chairman of the Board of Spirit, said:
This combination is all about growth, opportunities and creating value for everyone – from our Guests to our Team Members to the flying public at large. We’re a perfect fit – our businesses share similar values, including our longstanding commitment to affordable travel. At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Together, we will be even more competitive for our Guests and our Team Members, and we are confident we can deliver on the benefits of this combination to consumers.
Barry Biffle, President and CEO, Frontier, said:
Together, Frontier and Spirit will be America’s Greenest Airline and deliver more ultra-low fares to more people in more places. I couldn’t be more excited for our team members, customers, partners, the communities we serve and our shareholders.
Plans
According to the airlines, the new airline will deliver $1 billion worth of savings for future passengers, offer more than 1,000 daily flights to over 145 destinations in 19 countries (across complementary networks), expand with more than 350 aircraft on order, add new routes to underserved communities across the United States, Latin America and the Caribbean & expand frequent flyer and membership offerings.
By 2026, Spirit and Frontier expect to add 10,000 direct jobs and thousands of additional jobs at the companies’ business partners. The airlines state that given the growth of the combined company, it is expected that all current team members will have an opportunity to be a part of the combined airline.
Additionally, the airlines claim that the new airline will be America’s Greenest Airline.
Featured image by Airways Magazine and Spirit Airlines