Spirit Airlines & Frontier Merger Ahead?

Summary

  • Spirit Airlines would be a good fit for a merger with Frontier.
  • Spirit Airlines CEO hinted during conference call about something happening.
  • Big upside for Spirit Airlines shareholders in a merger deal.

Spirit Airlines (NYSE:SAVE) stock took a beating following its latest quarterly results, down well over 10% in the past couple weeks after it reduced its full year margin guidance slightly. Many analysts reduced their price targets slightly, albeit to levels significantly above its current price. In the midst of all the hype over Spirit's margin guidance many people missed a very significant quote from CEO Ben Baldanza during the conference call.

"Certainly, something could happen later in the year that would create more airplanes next year or something like that and maybe modify that (fleet growth) somewhat" - Ben Baldanza

This quote was intriguing and suggested the airline may be planning an order of aircraft at the end of this year.

Aircraft Order

Spirit Airlines workhorse aircraft, the Airbus A320 is going to have its production wound down starting next year as Airbus ramps up production on its successor, the A320NEO. The quote from Ben Baldanza suggested that perhaps Spirit was hoping to take delivery of some cheaper end of the line current generation aircraft next year for a significant discount. Upon further investigation however it turns out Airbus has oversold the current A320 and has sold an enormous amount of its latest A320NEO meaning that;

A) A end of the line discount aircraft order is now out of the picture and,

B) Any future aircraft orders will not begin deliveries for well over a year

What else could he be referring to?

The only other event that could create more aircraft without an aircraft order would be a merger with another airline. The question then became, who would be a good fit with Spirit Airlines? With some further research a match made in heaven was found.

Frontier Airlines

Frontier Airlines would be a perfect match for Spirit Airlines, and is

This article was written by

I usually write about airline, aerospace, transport and industrial stocks as I have followed these industries for many years, and developed an in-depth understanding of their inner workings. I also cover emerging market operations of a wide variety of companies in many industries. I will post detailed analysis and a guide to most developments that occur at all stocks I regularly cover. Over time I hope to expand my coverage of quality aerospace, airline, transport and industrial stocks. In general, I love trading value stocks that I believe have significant upside compared to downside long term. I prefer medium cap companies with compelling value, growth, or momentum. I focus on a select list of quality stocks that I have rigorously vetted which I update weekly. I like to create high quality in depth articles on stocks that I am passionate about and hope they will be of help to other investors out there or those looking for ideas to get started.

Disclosure: The author is long SAVE. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (36)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.