On Monday, Frontier Airlines (NASDAQ: ULCC) and Spirit Airlines (NYSE: SAVE) announced that they would merge in a $6.6 billion deal, making it the fifth-largest US airline if approved.
Spirit and Frontier say the merger would create a discount amalgamation able to compete with the four major US airlines (American (NASDAQ: AAL), Delta (NYSE: DAL), United (NASDAQ: UAL), and Southwest (NYSE: LUV)), which together control about 80% of the domestic market.
According to Spirit and Frontier, the agreement will result in $1 billion in annual savings for customers and 10,000 new jobs by 2026. Imagine all of the innovative ways they'll be able to tweet “We’re sorry. DM us and we’ll try to get this settled.”
The agreement is expected to be completed in the second half of 2022, but it must first go through regulators, who have already expressed a dislike for airline alliances.
The Justice Department filed a lawsuit to dissolve a “de facto merger” between American Airlines and JetBlue (NASDAQ: JBLU), in September.
In 2016, a more merger-friendly Department of Justice allowed Alaska Air (NYSE: ALK) to purchase Virgin for $2.6 billion, but it required the company to limit operations with American in order to do so.
Fun Fact
More than a quarter of the market at Orlando's airport would be held by a combined Frontier and Spirit Airlines—more than any other airline.
