US budget airline Frontier is again attempting to join forces with its low-cost rival Spirit Airlines, three years after the companies failed to complete a proposed merger.
The two airlines are the largest budget carriers in the US and any deal between the two could reshape the American airline industry.
Frontier tried to merge with Spirit in 2022 but was ultimately outbid by JetBlue. However the US Justice Department sued to block the $3.8 billion JetBlue deal saying it would lead to higher prices for Spirit customers who depend on low fares.
A federal judge agreed with that assessment and the two airlines dropped their merger bid.
Frontier has now said it is willing to pay $2.1 billion in stock and cash for Spirit.
However, Spirit said it had rejected the offer, which was less than the $2.9 billion merger that the airlines announced in early 2022. It said it would welcome further negotiations.
According to The New York Times Spirit’s chief executive Ted Christie and its chairman, Mac Gardner, said in a letter to Frontier executives the offer was too low.
In the letter, the Spirit executives were reported to have accepted the appeal of such a deal, but said the current offer was “both inadequate and unactionable.”
Frontier’s chief executive Barry Biffle said the merger would allow passengers to reap further savings.
“As a combined airline, we would be positioned to offer more options and deeper savings, as well as an enhanced travel experience with more reliable service,” the New York Times reported he said in a statement on Wednesday.
Spirit filed for bankruptcy protection in November. The biggest US budget airline, Spirit filed a Chapter 11 bankruptcy petition after working out terms with bondholders.
The airline has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totalling more than $1 billion in 2025 and 2026.
Budget airlines in the US have struggled under increased competition on popular routes in recent years.