Frontier and Spirit Airlines come together to create the fifth-largest U.S. airline
on Monday unveiled plans to create the fifth-largest U.S. airline in a $2.9 billion tie-up likely to tighten competition against traditional carriers.
"In a competitive industry like ours, the lowest costs always win," Frontier Chief Executive Barry Biffle told analysts. "These low costs will, in turn, enable us to keep our fares low for customers."The move comes at a time when the U.S. airline industry is grappling with volatility in travel demand due to new COVID-19 variants. At the same time, costs are soaring on a combination of rises in wages, fuel prices and airport charges.
The merger, which is expected to close in the second half of 2022, is projected to result in synergies of $500 million a year, mainly through operational savings. Peter McNally, global sector lead for industrials, materials and energy at research firm Third Bridge, said cost pressure is the biggest threat to recovery in the airline industry's profit.
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