"Corona Ends" Frontier-Spirit Airlines Merger... Expected to Become 5th Largest US Airline

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 7th (local time), Frontier Airlines and Spirit Airlines, the two major low-cost carriers (LCCs) in the United States, announced their merger. The merger was pursued with the expectation that travel demand would revive as the two-year-long COVID-19 pandemic is partially coming to an end this year, and it is expected to become the fifth largest airline in the U.S.

According to the Wall Street Journal (WSJ) and others on the 7th (local time), Frontier Airlines and Spirit Airlines announced that both companies agreed to merge. The total deal size is $6.6 billion (approximately 7.9 trillion KRW), with Frontier Airlines holding 51.5% of the merged company’s shares and Spirit Airlines holding 48.5%.

Specific details such as the new company’s brand name, CEO, and headquarters location have not yet been finalized, and the merger process is expected to be completed in the second half of this year. Currently, the two companies operate about 1,000 flights daily across the U.S., the Caribbean, and Latin America, most of which are domestic flights within the U.S. They stated that through the merger, they plan to directly hire an additional 10,000 employees by 2026 and expect to create thousands of jobs through partner companies as well.

William Franke, Chairman of the Board of Frontier Airlines, said, "We will create the most competitive ultra-low-cost airline in the U.S. for consumers." He explained that the merger aims to enhance competitiveness in the LCC industry, expand business opportunities, and offer customer-friendly fares. WSJ reported, "As the travel industry returns to pre-pandemic levels, major low-cost carriers in the U.S. are merging."

However, The New York Times (NYT) analyzed that the merger may face opposition from the Joe Biden administration. The Biden administration has been filing antitrust lawsuits against major corporate mergers, citing concerns over reduced competition and price increases. In fact, the U.S. Department of Justice filed a lawsuit last year to block the domestic partnership between American Airlines and JetBlue Airways.