Bankrupt Spirit Aviation Holdings Inc. is talking to Frontier Group Holdings about a merger, people familiar with the matter told Bloomberg.
A transaction could be announced as soon as this month, said the people, who asked not to be identified because the matter is confidential, according to Bloomberg. The discussions are ongoing and could end without a deal taking place, they said.
A merger between the airlines would be a big step for Spirit, which filed its second bankruptcy in less than a year in August. It comes as ultra-low-cost carriers struggle with rising costs and fierce competition from larger U.S. airlines.
Shares in Frontier rose nearly 10% in U.S. postmarket trading after Bloomberg’s report. Spirit was unchanged and closed at 20 cents in regular trading on Tuesday, Bloomberg reported
The discussions are taking place as Frontier abruptly replaced its longtime leader and Chief Executive Officer Barry Biffle.
Representatives for Spirit didn’t immediately respond to a request for comment. Frontier declined to comment.
According to the Bloomberg report, executives at Frontier have pushed for years for a combination of the two lower-cost carriers, which once specialized in offering heavily discounted ticket prices while charging travelers for anything else — including printed boarding passes and inflight water. Both have recently begun to offer more upscale options in a bid to expand their customer base.
Spirit has been buffeted by a bruising year for U.S. aviation, which has included a government shutdown, trade feuds and network disruptions that have curbed flying. Beyond these factors, the basic economy fares and strong networks of major carriers like United Airlines Holdings Inc. have made it harder for traditional discounters like Spirit to compete, Bloomberg said.
