Bankrupt Spirit Airlines Inc. rejected a new acquisition offer from the parent of Frontier Airlines but said it remains open to a long-discussed combination of the budget carriers.

Frontier Group Holdings Inc. met with Spirit’s leaders in recent days to discuss a proposal that it values at about $2.2 billion, supported by the issuance of new Frontier debt and stock, according to a statement January 29. It’s seeking to convince Spirit bondholders that the plan is preferable to bankruptcy restructuring, which Frontier said would result in “an unprofitable airline with a high debt load.”

Spirit rebuffed the offer, calling the terms “inadequate and unactionable.” The company said in a regulatory filing that it would continue to pursue a restructuring plan through bankruptcy but also “would be happy to consider” a revised bid that addresses deficiencies.

The previously undisclosed talks, which began with a letter from Frontier on January 7, revive a years-long courtship between the two pioneers of deep-discount air travel. Frontier agreed to buy Spirit in 2022 before JetBlue Airways Corp. came in with a bigger offer. After the JetBlue deal was blocked on antitrust grounds, Frontier again pursued Spirit, but talks broke down last year, Bloomberg has reported.The carriers have argued that joining forces could fortify their operations in the face of serious challenges in the ultra-low-cost segment of the market, which has been pummeled since the pandemic as competition from larger rivals has increased.

Both Frontier and Spirit have been adapting their business models to add premium offerings as consumers increasingly seek out higher-end options.

A combination would have “long-term viability to compete more effectively,” Frontier chairman Bill Franke said in the statement. The airline is prepared to continue discussions and believes a new transaction could be agreed on.

Frontier shares rose 1.9% at 9:37 a.m. on January 29 in New York.

Bankruptcy Hearing

Spirit filed for Chapter 11 protection in November 2024, after its business deteriorated in the wake of the failed JetBlue deal.The new bid comes as Spirit prepares to emerge from bankruptcy, which it has said is likely in the first quarter. A hearing to confirm its reorganization plan was delayed to February 13 from January 29 to give the carrier time to consider the proposal.

Spirit’s bankruptcy plan would hand control of the carrier to its bondholders and wipe out shareholders’ existing equity with no compensation.

The carrier said it rejected the latest Frontier offer in part because it would require noteholders to invest $350 million in equity. The bid would also require regulatory and court approvals, as well as a $35 million backstop fee.

Frontier’s offer is “risky and costly, with no certainty as to either timing or outcome and woefully insufficient financially,” Spirit chief executive officer Ted Christie and chairman Mac Gardner said in a letter to Frontier.