Spirit Airlines Rejects Frontier’s Offer, Proceeds With Standalone Recapitalization
Spirit Airlines has announced it will move forward with its standalone recapitalization, rejecting a new restructuring proposal from Frontier Group Holdings. The airline’s decision follows a careful evaluation of Frontier’s offer, which was deemed less favorable than Spirit’s existing plan of reorganization. Spirit’s management and Board of Directors determined that Frontier’s proposal posed significant risks, including regulatory and court approval uncertainties, extended Chapter 11 proceedings, and lower value for stakeholders.
Frontier’s New Proposal, submitted on Feb. 4, 2025, offered $400 million in second-lien debt and 19% of Frontier’s common equity to Spirit’s stakeholders. While it eliminated the need for Spirit’s planned $350 million equity rights offering, it required a waiver of the $35 million termination fee outlined in the Backstop Commitment Agreement. Spirit, in compliance with its Restructuring Support Agreement, shared the proposal with its key creditors, including Senior Secured Noteholders and Convertible Noteholders.
In response, Spirit presented a counterproposal on Feb. 7, 2025, which matched Frontier’s claimed value but introduced market-based mechanisms to determine equity distribution. The Spirit Counterproposal maintained that Frontier should cover the $35 million termination fee while ensuring a fair allocation of equity. However, on Feb. 10, 2025, Frontier rejected Spirit’s offer and reaffirmed its initial proposal.
With Frontier’s proposal off the table, Spirit remains focused on finalizing its restructuring process, which aims to reduce debt and strengthen its financial position. A confirmation hearing for Spirit’s plan of reorganization is scheduled for Feb. 13, 2025, at 10 AM EST. Notably, 99.99% of voting creditors have approved the plan, and nearly all objections have been resolved.
Spirit expects to complete its restructuring in the first quarter of 2025, emerging as a stronger and more competitive airline. By rejecting Frontier’s offer, the company reinforces its commitment to a self-sustained recovery, ensuring long-term stability and growth.
