Frontier Airlines Confirms Compelling Proposal to Combine With Spirit Airlines

Proposed Transaction Delivers Higher Recoveries for Spirit Financial Stakeholders, Including Shareholders, Than Spirit Standalone Plan of Reorganization

Frontier Stands Ready to Continue Constructive Discussions with Spirit and its Financial Stakeholders

DENVER, Jan. 29, 2025 /PRNewswire/ -- Frontier Group Holdings, Inc. ("Frontier") (NASDAQ:ULCC), parent company of Frontier Airlines, Inc. today confirmed it made a compelling proposal to combine with Spirit Airlines, Inc. ("Spirit") through the issuance of newly issued Frontier debt and common stock.

The proposed transaction would provide meaningful value to Spirit financial stakeholders, in excess of Spirit's standalone restructuring plan. As investors in the combined airline, Spirit's financial stakeholders could participate in the upside of a stronger low-cost carrier while benefiting from the very significant synergies Frontier expects to achieve by combining the airlines' operations.

Bill Franke, the Chair of Frontier's Board of Directors and the managing partner of Indigo Partners LLC, said, "This proposal reflects a compelling opportunity that will result in more value than Spirit's standalone plan by creating a stronger low fare airline with the long-term viability to compete more effectively and enter new markets at scale. We stand ready to continue discussions with Spirit and its financial stakeholders and believe that we can promptly reach agreement on a transaction. We are hopeful we can achieve a resolution that delivers significant value for consumers, team members, communities, partners, creditors and shareholders."

"While we are pleased with the strong results Frontier has been able to deliver through the execution of our business strategy, we have long believed a combination with Spirit would allow us to unlock additional value creation opportunities," said Barry Biffle, CEO of Frontier. "As a combined airline, we would be positioned to offer more options and deeper savings, as well as an enhanced travel experience with more reliable service."

Since submitting the proposal, Frontier has held discussions with members of Spirit's board of directors and management team, as well as representatives of Spirit's financial stakeholders with respect to the proposal. As part of the discussions, Frontier shared materials with Spirit and its financial stakeholders regarding the benefits of the proposed transaction. The materials, which are based on Spirit's bankruptcy court filings, also demonstrate that Spirit's standalone plan will likely result in an unprofitable airline with a high debt load and limited likelihood of success.

The materials have been furnished on Form 8-K with the Securities and Exchange Commission.

Frontier delivered a letter outlining the terms of its proposal and Frontier's willingness to continue to engage in negotiations to Spirit's Chair and Chief Executive Officer. The full text of the letter follows:

Dear Mr. Gardner and Mr. Christie:

As has been confirmed in our discussions with you and your advisors, both parties agree there is compelling industrial logic to the combination of our two companies. To that end, we have proposed to you a transaction, as previously communicated and as attached herein. We believe this transaction generates meaningful value for your stakeholders in excess of that generated by the plan you currently have on file with the Bankruptcy Court.

We put forward this offer in good faith, understanding that it generates more value for all Spirit stakeholders, including common stockholders. We have not, however, received a specific counterproposal but stand ready to negotiate any and all parts of this offer after receiving a substantive response from you.

We continue to believe that under the current standalone plan, Spirit will emerge highly levered, losing money at the operating level, and this would not be a transaction we would pursue. As a result, time is of the essence.

Sincerely,

Bill and Barry

Advisors

Citigroup Global Markets, Inc. is serving as financial advisor and Latham & Watkins LLP is serving as legal counsel to Frontier.

Cautionary Statement Regarding Forward-Looking Statements and Information

Certain statements in this communication should be considered forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Frontier's current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Words such as "expects," "will," "would", "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "forecast," "guidance," "outlook," "goals," "targets" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this communication are based upon information available to Frontier on the date of this report. Frontier undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law.

Actual results could differ materially from these forward-looking statements due to numerous risks and uncertainties related to Frontier's and Spirit's respective businesses and Frontier's proposed transaction with Spirit including, without limitation, the following: uncertainty as to whether Spirit will further pursue, enter into or consummate the proposed transaction on the terms set forth in the proposal or on other terms; uncertainties as to the timing of the proposed transaction; adverse effects on Frontier's share price resulting from the announcement or completion of the proposed transaction or any failure to complete the proposed transaction; failure to obtain applicable regulatory or other required approvals in a timely manner; failure to satisfy other closing conditions to the proposed transaction; failure of the parties to consummate the proposed transaction; risks that the combined companies will not realize estimated cost savings, value of certain tax assets, synergies and growth, or that such benefits may take longer to realize than expected or raise unanticipated costs; failure to realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; demand for the combined company's services; the growth, change and competitive landscape of the markets in which the combined company participates; expected seasonality trends; diversion of managements' attention from ongoing business operations and opportunities; potential adverse reactions or changes to business, creditor or employee relationships, including those resulting from the announcement or completion of the proposed transaction or the Spirit Chapter 11 proceeding; competitive responses to the announcement or completion of the proposed transaction; risks related to investor and rating agency perceptions of each of the parties and their respective business, operations, financial condition and the industry in which they operate; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction; the impacts of Frontier's significant amount of financial leverage from fixed obligations, the possibility Frontier may seek material amounts of additional financial liquidity in the short-term and the impacts of insufficient liquidity on Frontier's financial condition and business; failure to comply with the covenants in Frontier's financing agreements or failure to comply with financial and other covenants governing Frontier's other debt; changes in, or failure to retain, Frontier's senior management team or other key employees; current or future litigation and regulatory actions, including in relation to the proposed transaction, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; increases in insurance costs or inadequate insurance coverage; and other risks and uncertainties set forth from time to time under the sections captioned "Risk Factors" in Frontier's reports and other documents filed with the Securities and Exchange Commission (the "SEC"), including Frontier's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 20, 2024, and Frontier's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, which was filed with the SEC on May 2, 2024.

Contacts

Investor inquiries:

David Erdman, Investor Relations

Email: [email protected]

Phone: 720.798.5886

Media inquiries:

Jennifer F. de la Cruz, Corporate Communications

Email: [email protected]

Phone: 720.374.4207

 

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SOURCE Frontier Group Holdings, Inc.