Spirit-Frontier merger: What creation of fifth-largest airline could mean for South Florida
The $6.6 billion merger between South Florida-based carrier Spirit Airlines and Denver-based Frontier Airlines announced on Monday raises questions about the company’s future operations in Broward County.
The companies are portraying the merger, which still must be approved by federal regulators, as a victory for budget-conscious travelers — and stockholders. Spirit stock closed up 17% in Monday trading at $25.46 a share, while Frontier stock was up 4% at $12.82.
But it is not yet clear what impact the merger will have on Spirit’s more than 3,400 employees in South Florida. Spirit communications director Erik Hofmeyer declined to answer how the merger would impact local workers, saying instead that the new company would ultimately create 10,000 jobs. Hofmeyer said decisions regarding the new company’s headquarters and CEO have yet to be determined.
“We’re hiring fast,” Hofmeyer said, adding that the airline plans to accept 24 new planes this year.
Jeffrey Miller, a travel industry lawyer and professor of hospitality management at Florida Atlantic University, said the brand that emerges as the dominant carrier will be key to understanding how the merger will affect the local economy.
William A. Franke, chairman of the Frontier board, has been named chairman of the board of the combined company. Frontier’s current President and CEO Barry Biffle was previously the chief marketing officer at Spirit Airlines from 2008 to 2016.
In a call with investors on Monday morning, the companies announced that Frontier would be the majority stock holder, controlling 51.5% of stock, while Spirit will control 48.5%.
“If Frontier turns out to be the surviving carrier, it’s not good news for South Florida, as the base of an airline,” Miller said. “If Frontier emerges dominant, you can draw your own conclusions about where the executives will want their headquarters to be.”
Last September, Spirit announced it was downsizing its planned Dania Beach headquarters from 500,000 square feet by about two-thirds, with the company saying it hoped to focus on the flexibility of the 8.5-acre site. Initially, the company said it expected to eventually move 1,000 employees to the new site. Revised plans included a 6-story building with a 100,000-square-foot training center and a 7-story building with 200 apartment rental units for staff.
In 2020, the company also announced plans to move its operations center to Nashville, citing hurricane and tropical storm risk.
Miller said airline mergers tend to be messy for flight attendants and pilots and “lead to a lot of labor strife,” because the two airlines need to merge their “seniority lists” which determine flight attendant and pilot routes, hours and pay. In a brief statement, the national Association of Flight Attendants said it learned of the merger moments before it was announced early Monday, and that it was still evaluating the impact on its members.
The merger would make the combined Frontier/Spirit the fifth largest airline in the United States, after American Airlines, Delta, Southwest and United. Travel industry analysts say that the merger could take up to two years to be approved by federal regulators.
“There’s a big question about who will be the surviving airline and my bet is it’s going to be Frontier because they will be the majority shareholder. I think it’s likely that Barry Biffle remains CEO, that they keep the Frontier name and logos,” said Henry Harteveldt, a travel industry analyst at Atmosphere Research Group based in San Francisco. “If Frontier is the surviving airline, it’s logical to assume they will leave the headquarters in Denver. But Biffle has lived in South Florida and there are a lot of details to be considered like taxes and costs of living.”
Harteveldt said that South Florida potentially stands to lose the corporate jobs at the Spirit headquarters, but that jobs such as front desk workers, pilots and flight attendants should remain the same.
“I anticipate the combined airline will have a strong presence in South Florida,” he said. “I don’t think you’ll see less flights. If anything, both airlines are expanding in South Florida, it’s a region that’s growing in terms of people living there, it’s a popular leisure destination and the jumping off point to go to Latin America and the Caribbean.”
Bob Mann, a longtime airline industry analyst, said it is not obvious that the merger will lead to mass layoffs for either airline. That’s because most of their routes do not overlap — even when they are in the same city, he said. These days, approximately 29% of Spirit destinations are in the Caribbean and Latin America, while Frontier now flies to an extensive list of smaller U.S. cities that Spirit does not serve.
“The situation here is very different than a high-fare carrier consolidating and looking to eliminate positions,” Mann said. “Here, it’s two companies looking to expand off an ultra-low-cost base.”
As of Dec. 31, 2020, Spirit had 8,756 total employees, including 4,028 flight attendants, 2,497 pilots, 771 maintenance personnel, 694 employees in administrative roles, 281 passenger service agents, 261 ramp service agents, 162 airport agents, and 62 dispatchers. That compared with 8,938 employees a year earlier.
Spirit currently has 81 job openings at its Miramar offices, with another 16 openings at Fort Lauderdale-Hollywood International Airport and four openings at Miami International Airport, according to its website.
Harteveldt said that he expects the combined Frontier/Spirit airline to remain a budget airline, and that the move is likely about competing with the larger airlines.
“The news may be good for consumers in terms of fares. But what concerns me is that the customer service reputations for both Spirit and Frontier are terrible. I’m concerned the airline will not take customer service seriously and when combined, it will become more arrogant in how it treats its customers.,” he said.
Rebecca San Juan contributed reporting.
This story was originally published February 7, 2022 at 12:40 PM.
