Frontier Air Chairman Said to Meet With Spirit Air Leaders
(Bloomberg) -- Spirit Aviation Holdings Inc. has engaged rival Frontier Group Holdings Inc. in high-level talks about the carrier’s ongoing efforts to chart a path forward less than six months after emerging from bankruptcy.
Spirit Chairman Robert Milton sat down early this week with Bill Franke, the Frontier chair, near Spirit’s headquarters in Dania Beach, Florida, according to a person familiar with the matter.
Spirit’s chief executive officer, Dave Davis, was also at the meeting, which was initiated by Milton, the person said. Spirit Aviation is the parent of Spirit Airlines.
The Florida talks focused on Spirit’s efforts to rebuild and the broader state of the US airline industry, and therulcce was no discussion around an acquisition, said the person, who asked not to be named because the meeting was private.
A Spirit representative didn’t respond to requests for comment. Franke declined to comment through his Indigo Partners private equity firm.
Spirit shares rose 3.2% Friday to $1.29 as of 11 a.m. in New York trading. Frontier joined most other US airlines in sliding about 1% to $4.67.
The meeting occurred less than a week after Spirit secured a lifeline by borrowing all of the $275 million available through a revolving credit facility, allowing it to avoid a liquidity crisis that had threatened its ability to accept credit card payments.
The airline, which warned investors earlier this month it might not survive if it can’t raise cash quickly enough, has said it may sell aircraft, real estate and excess airport gates. It also could seek to renegotiate costly aircraft leasing contracts.
Spirit’s efforts to turn around its operations ran up against a dramatic falloff in US air travel earlier this year as Americans grappled with high prices, inflation and economic uncertainty.
Frontier and Franke have pushed for years for a combination of the two lower-cost carriers, which once specialized in offering heavily discounted ticket prices while charging travelers for anything else — including printed boarding passes and inflight water. Both have recently begun to offer more upscale options in a bid to expand their customer base.
Spirit rejected an 11th-hour Frontier offer in January, following its November bankruptcy filing. The $2.2 billion proposal was “inadequate and unactionable,” Spirit said at that time.
Moody’s Ratings downgraded its rating on Spirit on Aug. 22, citing the carrier’s “deteriorating liquidity” and forecast that it could burn through more than $500 million in cash this year because of weak domestic leisure travel demand and a difficult pricing environment.
Spirit filed for Chapter 11 protection in November to restructure about $1.6 billion in debt after losing ground post-pandemic as larger airlines lured travelers away by offering more basic-economy fares.
It was also hit by an engine manufacturing defect that grounded a portion of its aircraft fleet and historically high labor costs under new contracts.
The carrier emerged from bankruptcy protection in March.
The airline reduced debt by $795 million during the bankruptcy by converting it into equity stakes for its largest bondholders including Citadel Advisors, Pacific Investment Management Co. and Western Asset Management Co.
(Updates from sixth paragraph with share prices.)
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