Spirit Airlines Stock Soars as Frontier Explores Fresh Acquisition Proposal
Spirit Airlines shares experience a significant boost amid early talks of a renewed acquisition bid by Frontier Group Holdings, potentially reshaping the discount airline landscape.
HIGHLIGHTS
- Spirit Airlines' shares jump sharply in early trading following reports that Frontier Group Holdings is initiating a fresh acquisition attempt.
- According to The Wall Street Journal, discussions between the two companies have recently taken place, with the proposed deal linked to Spirit’s ongoing debt restructuring efforts.
- Spirit is currently negotiating with bondholders regarding a possible bankruptcy filing, with merger negotiations still in preliminary stages and uncertain outcomes.
Shares of Spirit Airlines (SAVE) surged by nearly 20% in premarket trading on Wednesday, fueled by news that Frontier Group Holdings (ULCC), the parent company of Frontier Airlines, is pursuing a renewed bid to acquire its competitor in the budget airline sector.
The Wall Street Journal reports that the two companies have engaged in recent talks, aiming to incorporate the potential acquisition into Spirit’s broader debt restructuring strategy. Spirit is actively negotiating with bondholders as it contemplates a possible bankruptcy filing, though merger discussions remain early and may not culminate in a finalized agreement.
Last week, Spirit extended its deadline for debt refinancing negotiations involving Visa (V) and Mastercard (MA), signaling ongoing financial restructuring efforts.
Frontier’s Previous Attempt to Acquire Spirit in 2022
Frontier’s initial effort to purchase Spirit in 2022 was halted when JetBlue Airways (JBLU) presented a higher bid. The proposed JetBlue merger, which would have created the nation’s fifth-largest airline, was ultimately terminated in March due to antitrust concerns from regulators, leading to a sharp decline in Spirit’s stock price.
Despite the recent premarket rally, Spirit’s shares have declined by 85% year-to-date. Meanwhile, Frontier Group’s stock has remained relatively stable, with gains exceeding 20% in 2024.
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