Frontier Airlines Reveals $1M Costs from Unsuccessful Spirit Airlines Merger

Frontier Airlines has unveiled that it incurred total expenses amounting to $1 million due to the unsuccessful merger attempt with Spirit Airlines in the first half of 2023.

As indicated in their Q2 2023 filing with the United States Securities and Exchange Commission (SEC), Frontier Airlines reported expenses of “less than $1 million and $1 million” for the proposed merger in Q1 and H1 2023 respectively. These costs were attributed to “merger-related retention bonus expense for all eligible employees subject to CARES Act compensation restrictions.”

Comparatively, during the same six-month period in 2022, Frontier Airlines’ merger-related expenses were notably higher at $20 million, encompassing retention bonuses, along with banking, legal, and accounting fees.

Frontier Airlines also highlighted that should Spirit Airlines engage in a merger or formal merger agreement within a year after terminating their merger contract, they would be obligated to pay Frontier Airlines $69 million.

Despite the merger setback, Frontier Airlines achieved a substantial net profit of $71 million in Q2 2023. Its performance for H1 2023 was equally remarkable, registering a net income of $58 million, in stark contrast to the $108 million loss during the same period in 2022.

Barry Biffle, the president and CEO of Frontier Airlines, emphasized that the company’s post-pandemic performance was notable, with significant growth and a five percent reduction in non-fuel adjusted unit costs compared to the previous year.

Acknowledging the challenges posed by adverse weather conditions in June 2023, Biffle reaffirmed their commitment to delivering cost-effective services while sustaining their competitive edge in the industry.

Frontier Airlines and Spirit Airlines concluded their merger agreement in June 2022, after JetBlue presented a more enticing offer to Spirit Airlines’ shareholders. Executives, including Biffle, contested JetBlue’s proposal, branding it unrealistic for regulatory approval, yet the merger was approved by Spirit Airlines’ shareholders in July 2022.

Recently, in June 2023, JetBlue aimed to facilitate their merger with Spirit Airlines by granting Frontier Airlines access to Spirit Airlines’ slots and gates at New York LaGuardia Airport (LGA), addressing concerns from the US Department of Justice (DOJ).

The DOJ and JetBlue are anticipated to engage in a court battle in October 2023 regarding the Spirit Airlines merger.