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Frontier and Spirit to Merge Creating Fifth Largest Airline in U.S.

Frontier Airlines and Spirit Airlines, the two largest discount carriers in the U.S., have agreed to merge in a deal valued at $6.6 billion, creating what would become the fifth-largest airline in the country. The merger gives Airlines a 51.5% controlling stake in the combined airline.Spirit investors will receive 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders an implied value of $25.83 per share, which is a 19% premium over the value of Spirit shares the end of last week, the companies said.

Ted Christie, CEO of Miramar, Fla.-based Spirit, said that the transaction is centered around creating an aggressive low-fare competitor that will better serve guests, expand career opportunities for our team members and generate value for our shareholders. They believe that they are a perfect fit with Frontier. Our businesses share similar values, including our long-standing commitment to affordable travel.

The boards of both companies approved the deal over the weekend. It would be the first merger of large U.S. airlines since Alaska Airlines’ combination with Virgin America in 2016 and a test of the Biden administration’s tolerance for consolidation, particularly among airlines, one of the most scrutinized industries by antitrust regulators.

Spirit’s shares soared more than 17% after the deal was announced, closing at $25.46, while Frontier ended the day $12.82 up 3.5%. Frontier Chairman Bill Franke, a longtime discount airline investor, and executive will chair the combined company, which he said will create America’s most competitive ultra-low fare airline for the benefit of consumers.

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