Valued at 6.6 billion U.S. dollars, the transaction would create the 5th largest airline in the United States following American Airlines, Delta Airlines, Southwest Airlines and United Airlines.
Management of the two airlines aims to form the most competitive ultra-low cost fare airline in the United States and expand operations in the coming years, according to a release by the two airlines.
The combined airline would expand service to underserved small and mid-sized cities across the United States based on existing networks, which cover over 145 destinations in the United States, Latin America and the Caribbean.
The new airline expects to add 10,000 direct jobs by 2026 with 350 aircraft on order now.
The combination also is expected to deliver annual run-rate operating synergies of 500 million U.S. dollars once full integration is completed.
The new airline would have about 5.3 billion U.S. dollars of annual revenues based on 2021 results and a better financial profile with a combined cash balance of around 2.4 billion U.S. dollars by the end of 2021, according to the release.
Still, both Spirit Airlines and Frontier Airlines posted annual losses from 2020 to 2021 with expenses inflated in 2021, according to the latest operating results of the two companies issued on Monday.
The merger deal has been approved by the boards of directors of both companies and is expected to close in the second half of 2022, said the release.
William A. Franke, the chairman of Frontier's board of directors, will serve as the chairman of the board of the combined company.
The combined company's management team, branding and headquarters will be determined by a committee led by Franke prior to the close of the deal, said the release.
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