Two American budget airlines, Spirit and Frontier are in discussion for another merger, according to a Bloomberg report. This comes after Spirit Airlines filed for Chapter 11 bankruptcy protection in August, as the airline has struggled to keep afloat since the Covid-19 pandemic.
A Deal to the Resecure for Spirit Airlines
The deal could rescue the budget airline from unpaid debt at a time of stiff competition from larger US carriers and higher operating costs across the board.
Discussions are ongoing and could end without a deal taking place. Spirit has long pursued a merger with Frontier, as this is the fourth attempt to come to a definitive agreement.
The first offer was made in February 2022, but it was abruptly overtaken by JetBlue Airways to which Spirit rejected its advances.
A merger between the two airlines would see a significant step up for Spirit, which filed its second bankruptcy in less than a year in August.
The union would help the budget carriers to compete in the current aviation industry environment. Basic economy fares and strong networks of other major carriers, such as United Airlines and Delta Airlines, have made it difficult for traditional discounter airlines to compete.
A Year of Struggle for the Budget-Friendly Airlines
The airlines have been bruised by a grim year for US aviation, with the national government shutdown, trade feuds and network disruptions. Moreover, the merger discussions are taking place as Frontier have replaced its leader and CEO, Barry Biffle.
Spirit Airlines rose to prominence in the early 2010s with cheap ticket prices, optional add-ons and shock marketing tactics. It was quite successful with its lean operations. Spirit would often save money by cramming passengers into one-size-fits-all planes with non-reclining seats and charging extra for anything and everything.
After the Covid-19 pandemic, the carrier faced higher costs and upended its budget-friendly operations. It had a total of $3.6 billion in outstanding debt which left Spirit with the only option to file for bankruptcy.
Spirit Airlines has roughly 12,000 employees and in November, it announced 150 jobs would be cut across corporate and operational roles.
Since August, the airline has reduced flights, pulled out of 14 airports and broken more than 80 aircraft lease commitments as part of efforts to cut cost.
Both Spirit and Frontier have declined comments to news outlets, leaving much to speculate.
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