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The announcement comes as major U.S. airlines forecast profitability in 2022, benefiting from higher vaccination rates and reopening of economies from pandemic-led lockdowns.
The companies expect the cash-and-stock deal to accelerate investment in innovation and growth, and help compete with major U.S. airlines like American Airlines (NASDAQ:AAL) Group, Delta Air Lines (NYSE:DAL), Southwest Airlines (NYSE:LUV) and United Airlines Holdings (NASDAQ:UAL).
The merged business is seen adding 10,000 direct jobs by 2026, the companies said, adding that it expects to deliver $1 billion in annual consumer savings and offer more than 1,000 daily flights to over 145 destinations.
The transaction value of the deal is $6.6 billion when accounted for the assumption of net debt and operating lease liabilities, the carriers said in a statement.
Colorado-based Frontier will own 51.5% stake in the combined entity, while the remaining 48.5% will be held by Spirit’s shareholders.
Frontier’s offer price of $25.83 per share of Spirit represents a premium of 18.8% to the stock’s last close on Friday. Shares of Spirit rose about 11.6% in premarket trade after the announcement.
