By Dhirendra Tripathi
Investing.com – Spirit Airlines stock (NYSE:SAVE) soared 12.5% in premarket trading Monday after the company agreed to be bought by the owner of Frontier Airlines in a transaction valued at $6.6 billion.
The combined company is expected to have annual revenue of around $5.3 billion. Frontier Group (NASDAQ:ULCC) will own 51.5% in the combined entity, while the remaining 48.5% will be held by Spirit's shareholders. Frontier's offer of $25.83 per share is a premium of nearly 19% to the stock's Friday close of $21.73.
The combined group is expected to offer more than 1,000 daily flights to over 145 destinations in 19 countries, a joint press release said. The deal is expected to deliver $1 billion in annual consumer savings.
The companies are hoping that bulking up will allow them to address some of the problems created by the pandemic, notably heavy debt loads and operational stresses due to staff shortages. The deal comes at a time when booking trends indicate a strong revival in the coming months.
Both the airlines also declared their fourth-quarter numbers today. Spirit’s total operating revenue nearly doubled to $988 million while adjusted loss per share more than halved to 64 cents. President and CEO Ted Christie said bookings are improving sequentially and “trends indicate travel demand in the second half of the first quarter should be quite strong."
At Frontier, revenue climbed 128% to $609 million while the net loss narrowed to 25 cents.