China News Agency, New York, February 7th. On the 7th local time, Frontier Airlines and Spirit Airlines, the two largest low-cost airlines in the United States, announced that they had agreed to merge, forming the fifth largest airline in the United States.
The two companies’ boards over the weekend approved the merger, valued at $6.6 billion, valued at net debt and operating leases, The Wall Street Journal reported.
Under the agreement, Frontier Airlines will acquire Spirit Airlines for $2.9 billion in cash and stock.
After the merger, Frontier Airlines will own 51.5% of the new company, its chairman William Frank will be chairman of the new company, and Spirit Airlines will own the remaining 48.5% of the shares of the new company.
The new company is expected to save consumers $1 billion a year in ticket spending due to lower operating costs due to the merger, the report said.
In addition, the new company will try to avoid layoffs by 2026 and will directly add 10,000 jobs on the original basis.
Spirit Airlines president and CEO Ted Christie said the merger deal is about creating an ultra-low fare competitor to better compete with traditional airlines such as American Airlines and Delta Air Lines.
The new company will add routes in the U.S. and Latin America, which it believes will further democratize air travel.
Frontier's Frank said in a statement that he was honored to be involved in creating a groundbreaking new airline "at a time when we need oversight and regulatory support" and that regulatory approval of the merger is expected to be likely. for several months.
Some analysts are skeptical that the deal will be approved, CNBC said, arguing that the Biden administration has intensified scrutiny of merger deals of large companies in recent years, and authorities are scrutinizing behavior that could hinder market competition. took a firmer stance.
Last September, the U.S. Department of Justice filed an antitrust lawsuit against American Airlines and JetBlue Airways.
However, some analysts are optimistic, as the merger of the two budget airlines is generally good for consumers.
Over the past 25 years, the U.S. civil aviation market has been reshaped by mergers and acquisitions.
The current four major airlines, including American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines, were formed by a series of merger transactions of 10 airlines in history.
American Civil Aviation's most recent merger was in 2016, when Alaska Airlines bought Virgin America for $2.6 billion.
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