Bankrupt Spirit Airlines Rejects Frontier's New Offer, Aims To Finalize Restructuring By Q1 2025

Spirit Airlines, Inc. SAVEQ announced an update on its restructuring, including a new proposal from Frontier Group Holdings, Inc. ULCC, Frontier Airlines’ parent company.

On February 4, 2025, Frontier submitted a revised restructuring proposal in which Spirit's stakeholders would receive $400 million in second-lien debt and 19% of Frontier's common equity. This proposal would eliminate the need for Spirit's previously announced $350 million equity rights offering but required a waiver of a $35 million termination fee.

After careful evaluation by management and Board, alongside legal and financial advisors, Spirit said the proposal provided less value than existing restructuring plan. Additionally, Spirit said the proposal posed uncertainties regarding timing, higher costs, and regulatory and court approvals.

Related: Frontier Revives Spirit Merger Talks Citing Stronger Future Together

On February 7, 2025, Spirit submitted a counterproposal that matched the total value claimed by Frontier but introduced a market-based mechanism for equity distribution and required Frontier to pay the $35 million termination fee. However, Frontier rejected Spirit's counterproposal and reaffirmed its original February 4 offer.

Despite these developments, Spirit said it remains focused on completing its restructuring swiftly to reduce debt and position itself for long-term success. The confirmation hearing for its reorganization plan is scheduled for February 13, 2025, at 10 AM EST. With 99.99% of voting creditors in favor and only two objections remaining, the company expects to finalize its restructuring in the first quarter of 2025.

In early 2024, JetBlue‘s bid was blocked due to antitrust concerns. Spirit subsequently filed for Chapter 11 bankruptcy in November 2024.

Price Action: ULCC shares are trading higher by 2.16% at $9.95 premarket at the last check Wednesday.

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