Good news for lovers of affordable airline tickets–Spirit and Frontier Airlines, the two largest low-cost airlines in the US, have agreed to merge in a $6.6 billion agreement. The merger will create the country’s fifth largest airline and give Frontier Airlines a 51.5% controlling stake in the new airline.
The acquisition was approved over the weekend and would be the first large-scale airline merger in the US since Alaska Airlines merged with Virgin America in 2016. Spirits CEO, Ted Christie, said “The transaction is centered around creating an aggressive low-fare competitor that will better serve guests, expand career opportunities for our team members and create value for our shareholders.”
The new name of the merged airline, the CEO, and the location of the airline’s headquarters were not announced by the firms. Those concerns should be answered after the merger is complete, which is expected in the second half of 2022.
The agreement comes as airlines continue to recover from the pandemic. Low-fare airlines like Spirit and Frontier, who cater to price-conscious tourists traveling for leisure, have fared better than larger airlines. Larger carriers heavily rely on income from international and business travel, two categories that have been slow to recover. As a result, US airlines have been pursuing domestic tourists who travel for leisure to help them recover from pandemic losses.
Will you be taking a ride on the new airline once the deal is complete?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.