Airline merger would give Frontier, Spirit bigger scale in Atlanta
TRIBUNE CONTENT AGENCY 11:59 PM ET 2/7/2022
Symbol Last Price Change | SAVE | 25.46 | 0 (0%) | | LUV | 44.6 | 0 (0%) | | DAL | 40.94 | 0 (0%) | | AAL | 17.28 | 0 (0%) | | NYT | 40.7 | 0 (0%) | | QUOTES AS OF 04:10:00 PM ET 02/07/2022 |
Feb. 7—Frontier Airlines and Spirit Airlines(SAVE) announced Monday they will merge, joining together two ultra low-cost U.S. carriers.
Denver-based Frontier and Miramar, Fla.-based Spirit have become known for their budget model, charging extra for large carry-on bags as well as checked bags, and also charging for in-flight beverages.
The two airlines said combining would allow them to "compete even more aggressively, especially against the dominant 'Big Four' airlines, among others." The Big Four airlines they refer to are American, Delta, Southwest(LUV) and United.
Frontier plans to buy out Spirit shareholders. The merger requires regulatory approval, including possible antitrust scrutiny.
Frontier and Spirit have each carved out a small presence in Atlanta over the years. As of 2021, Spirit carried 2.92% of the passengers at Hartsfield-Jackson, while Frontier Airlines carried 1.91% of passengers. That's based on data for the year through October, the most recent report available from the airport.
The dominant carrier at Hartsfield-Jackson is Atlanta-based Delta Air Lines(DAL), which makes up more than 80% of the market including its Delta Connection regional carrier flights.
The second-largest carrier at the Atlanta airport is Dallas-based Southwest Airlines(LUV), which has 9% of the market.
Even though Spirit controlled less than 3% of the market, that still makes it the third-largest carrier in Atlanta behind Delta/Delta Connection and Southwest(LUV).
American Airlines (AAL) carried 2.37% of the passengers in Atlanta, while United Airlines carried 1.41%.
Frontier and Spirit say with the deal, they would go from the 7th- and 8th- largest airlines in the U.S. to the 5th-largest airline.
It's yet to be seen how flights and service might change under a merged Frontier and Spirit. The airlines called their route networks "highly complementary" and said they planned to add new routes to "underserved communities" in the U.S., Latin America and the Caribbean.
They also said they expect to add 10,000 jobs by 2026. Spirit and Frontier had a combined $5.3 billion in annual revenues in 2021. Frontier's majority shareholder, Indigo Partners, is a previous investor in Spirit.
However, some observers expect the deal could face antitrust challenges from the Biden administration, which has taken a more aggressive approach to challenging mergers, the New York Times(NYT) reported. |
