Frontier Group Stock On Track To Be The Worst Performer Among Major US Airlines In 2025 — All Eyes On A Potential Spirit Merger

• Any positive development could help the Frontier Airlines parent offset the year's declines.
• Over the past few years, the dip in demand for economy fares, combined with rising costs, has severely eroded margins at low-cost carriers.
• The merger could provide Spirit with a viable way to emerge from Chapter 11 protection as the carrier continues to burn cash.

Frontier Group stock (ULCC) rose over 7% on Wednesday after a report said that the U.S. budget airline is in talks with bankrupt Spirit Airlines for a potential merger.

Bloomberg News reported that a deal could be announced as soon as this month, citing people familiar with the matter. It further stated that the discussions are ongoing and could end without a deal.

Any positive development could help the Frontier Airlines parent offset the year's declines. Despite Wednesday’s gains, Frontier stock was down over 23% this year, the worst percentage decliner among major airlines. In comparison, regional carrier SkyWest's stock has gained more than 3% so far this year; Allegiant Travel's stock has declined nearly 7%; American Airlines' stock has lost 10%; and Alaska Air's stock has tumbled over 19%.  

Rationale Behind The Deal

Over the past few years, the dip in demand for economy fares, combined with rising costs, has severely eroded margins at low-cost carriers. Earlier this month, Spirit Airlines, which filed for bankruptcy for the second time in less than a year, revealed plans for further job cuts and a reduction in flight schedule in November to cut costs.

The merger could provide Spirit with a viable way to emerge from Chapter 11 protection as the carrier continues to burn cash, with the potential addition of about 100 planes to Frontier’s fleet at leasing rates more favorable compared to last year, Francois Duflot and George Ferguson of Bloomberg Intelligence wrote in a note.

However, according to analysts, Frontier's key focus is improving yields, as they clarified that its real competitive threat is United Airlines, not Spirit. Based on government figures through September, a combined Spirit-Frontier would be the fifth-biggest U.S. carrier by passenger miles carried, ahead of JetBlue Airways and Alaska Air Group.

The companies have held merger talks as late as early this year. However, Spirit had rejected Frontier's $2.2 billion deal, labeling it “inadequate.”

What Are Stocktwits Users Thinking?

Retail sentiment on Stocktwits about Frontier was in the ‘extremely bullish’ territory at the time of writing.

“A merger is risky, but could pay off if the combined entity can gain critical mass,” one user said.

Frontier shares are down just over 2% this week. The company said Monday that insider James Dempsey will step in as chief executive, replacing longtime CEO Barry Biffle. It added that Biffle, who has led the airline since March 2016, will remain in an advisory role through December 31.

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