Dec 16 (Reuters) – Bankrupt Spirit Aviation Holdings is in discussions to merge with Frontier Group Holdings, Bloomberg News reported on Tuesday, citing people familiar with the matter.
Frontier’s shares rose more than 5% in after-hours trading.
A deal could be announced as soon as this month, the report said, though talks are ongoing and may still collapse without an agreement.
Both Spirit and Frontier Airlines declined to comment, when contacted by Reuters.
Frontier executives have long advocated merging the two airlines, which built their businesses on deeply discounted fares, according to the report.
The move comes as ultra-low-cost carriers grapple with rising costs and intense competition from larger U.S. airlines.
A merger would be a major milestone for Spirit, which filed for its second bankruptcy in less than a year in August, citing dwindling cash reserves and mounting losses.
It has since cut headcount, reduced flying, pulled out of 14 airports and shed commitments on more than 80 aircraft leases as it pursues a broader cost-cutting plan.
The airline on Monday secured an additional $100 million in emergency financing to support its operations and restructuring efforts while under bankruptcy protection.
The reported talks between the two carriers comes a day after Frontier announced the exit of longtime CEO Barry Biffle and handed over interim charge to insider James Dempsey.
(Reporting by Abhinav Parmar in Bengaluru; Editing by Alan Barona and Shailesh Kuber)
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