Spirit Airlines and Frontier Airlines have revisited discussions about a potential merger, according to a wall street journal report. This news comes after previous talks between the two major US low-cost carriers stalled earlier this year. According to WSJ, the two airlines have been in recent talks. However, the proceedings are in an early stage and an agreement may not come to fruition.
The report adds that if such a deal is reached, it would likely be a part of Spirit Airlines’ debt restructuring initiatives. No formal comment has as yet been made by either airline to confirm the renewed negotiations. The reported negotiations come two years after similar talks between the two budget carriers. Spirit and Frontier first announced plans to merge in February 2022.
The proposed US 6.6 billion merger aimed to create a larger, more competitive airline in the United States. However, the proposal did not come to fruition, as Spirit opted to move with a better deal from jetblue airways.
The proposed JetBlue Spirit merger subsequently fell foul of opposition from the Justice Department. The potential merger then collapsed amid findings that it would stifle market competition. By combining their operations, Spirit and Frontier could create a larger, more powerful airline with a wider network of routes. The strategic move would offer both carriers a stronger competitive position in the market.
Spirit has struggled to return its profits to the black in the post-pandemic period. The failed merger proposal with JetBlue left the carrier’s future prospects under a further dark cloud. In recent times, Spirit Airlines has moved to furlough flight crews and defer aircraft deliveries in order to maintain its financial bottom line.
The report of renewed negotiations between the two low-cost carriers is yet to be formally confirmed by either carrier. However, regulatory approval from the Department of Justice and other government agencies will again be necessary. Additionally, there may be attendant concerns about job losses and labor disputes.
If a merger was able to clear regulatory obstacles, the combined airline entity could become one of the largest low-cost carriers in the United States. This would effectively become the fifth largest US carrier behind the Big Four airlines. The possibility of renewed discussions between Spirit and Frontier represents a significant development in the US airline landscape.
