Spirit Airlines, Inc. (NYSE: SAVE) and Frontier Group Holdings, Inc. (NASDAQ: ULCC) confirmed that they both have inked a merger pact according to which both the firms will merge and create a most competitive ultra-low fare airline of America. Shares of Spirit Airlines surged 12% at the time of writing on Monday's pre-market trading session after the company announces merger deals.
Spirit Airlines disclosed that the main purpose behind this merger is the launch of an ultra-low fare competitor to serve its guests even better. It is also aiming to grow career opportunities for its team members and surge competitive pressure, resulting in more consumer-friendly fares for the flying public. The firms are looking ahead to combine their teams to shake up the airline industry while also continuing its devotion to excellent guest service.
On the other hand, Frontier Airlines is of the view that the merger of both the companies will introduce America’s Greenest Airline and offer more ultra-low fares to more people in more places. Both firms are perfect partners because both share the common goal of cheap travel.
Furthermore, Frontier and Spirit anticipate revolutionizing the industry for the benefit of consumers as it is introducing more ultra-low fares to more travelers in more destinations across Latin America, the US, and the Caribbean, including major cities as well as needy communities.
Additionally, the combined company will likely offer $1 billion in annual consumer savings provide more than 1,000 daily flights to over 145 destinations in 19 countries, across complementary networks, and grow more than 350 aircraft to offer more ultra-low fares. The merged company will likely grow regular flyer and membership offerings.
Spirit and Frontier are intending to10,000 direct jobs and thousands of additional jobs at the companies’ business partners by 2026. The current team members of both the companies will also have the opportunity to join the combined company and enjoy additional career opportunities in the merged firm.
Moreover, the merged company will also have the youngest, most modern, and fuel-efficient fleet in the US, including the largest fleet of A320neo family aircraft of any airline in the country. The merged airline is projected to attain over 105 seat miles per gallon by 2025. The agreement has been authorized mutually by both the companies’ boards of directors.
Financial Details of Agreement
As per the merged pact, Spirit equity holders will obtain 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This suggests a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on February 4, 2022. It signifies a premium of 19% over the February 4, 2022, closing price of Spirit, and a 26% premium based on the 30 trading-day volume-weighted average prices of Frontier and Spirit.
The companies have confirmed that after the successful execution of the deal, current Frontier equity holders will hold nearly 51.5% and current Spirit equity holders will hold nearly 48.5% stake of the combined airline, on a fully diluted basis, offering both Frontier and Spirit equity holders with considerable advantage.