WHEN: Today, Monday, February 7, 2022
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC exclusive interview with Spirit Airlines President & CEO Ted Christie, Frontier Airlines President & CEO Barry Biffle and Indigo Partners Founder Bill Franke on CNBC’s “Squawk Box” (M-F 6AM – 9AM ET) today, Monday, February 7th. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
PHIL LEBEAU: A three-person interview Becky. Let’s bring in the three principles behind this merger of Frontier and Spirit. We’re talking about Barry Biffle, CEO of Frontier, Ted Christie, CEO of Spirit and Bill Franke, who is the Chairman of Frontier and also the Managing Partner at Indigo Partners, the parent of Frontier, the man who put this deal together. Bill we’ve got a couple of questions for you as well but Ted, I want to start first with you. How long have you guys been talking with Frontier about a potential deal?
TED CHRISTIE: Well, good morning, Phil. It’s good to be here. An exciting day for Spirit, an exciting day for the airline industry to be honest. And you know, we’ve been working here for the latter part of last year as when this started in earnest. But I think what we can say is that this combination makes a lot of sense. It’s really good for consumers. It’s going to be good for shareholders, it’s going to be good for our teams. And for that reason, we’re really excited about it today.
LEBEAU: Barry, I know you guys are calling this a merger of equals but, but let’s be clear here. Frontier will have greater control, 51.5%. The share payout is going to the Spirit shareholders. When will you name a CEO? Have you guys already discussed that, headquarters, location and frankly, what’s the name of the airline?
BARRY BIFFLE: Well, Bill can speak to this but look, a committee chaired by our Chairman Bill Franke will actually decide that in due course, but I think what’s exciting for both shareholders is that everybody wins through this transaction. Consumers are going to win with a billion dollars in savings. Our shareholders win with 500 million in synergies and our team members win with 10,000 more direct jobs in the next couple of years as well, 1,000 more with our business partners, so everyone’s going to win but we will announce the headquarters, brand and management team in due course.
LEBEAU: Bill, I have a question for you as the person who put this together. Surely you’ve been around the block of time or two and you know that with every administration, they look at these types of deals slightly differently than previous administrations. And right now, the Biden ministration has taken a much more discerning view when it comes to potential mergers. How confident are you that this will get approval, that they will look at this and say, yeah, ultimately, we think this is good for the consumer.
BILL FRANKE: Well, you don’t want to get in, you don’t want to get in front of yourself here but it strikes me that this is the type of transaction that the administration should in fact support. It’s beneficial to the consumer. It’s beneficial to the employees, beneficial to the communities that the airlines serve. And at the end of the day, even on combination, these two airlines will control less than 10% of the market. So, it’s not an overpowering event and it takes place inside a market where 80% of the airline markets are controlled by four other airlines, American, Delta, United and Southwest and so as a consumer advocate, we believe that this is a transaction that should receive favorable oversight.
LEBEAU: Barry, you guys have fleets that complement each other, all Airbus fleets. You guys have a big order with Airbus. Is that one of those synergies that you’re looking at and you’re saying, boy on paper, it makes a lot of sense for these two carriers to come together?
BIFFLE: Absolutely Phil. You know, our combined fleet will be all Airbus and so that makes this a lot easier from an integration perspective. But just complementary business models overall, make this very synergistic and its benefits as Bill said to the consumer because we can focus on delivering more low fares to more people in more places.
LEBEAU: Ted, we’ve talked in the past about where the market is right now and you guys have been talking about a potential combination for almost a year, according to what you just told us here. How much as you were looking at this combination did you factor in the current market and the fact that for the airline industry right now, it’s a, it’s a tough period. While everybody’s optimistic about the future, it’s a very tough period here let’s say for the next six months at least.
CHRISTIE: Well, we get asked that question or will be asked that question why now and the answer I like to give is why not? I mean, this is a really fantastic combination and as Barry just said, we think it’s extremely complimentary. There’s going to be a lot of value to deliver to the consumers. This is not a regular airline merger. This is a completely different thing where you’ve got two low-cost leaders getting together to figure out ways to drive more growth and it’s going to be extremely beneficial to a lot of constituents and for that reason, we’re very, very excited about getting this thing across the goal line.
LEBEAU: Bill, you’ve got a vast experience with both of these airlines. We talked about it when we had the news about the merger and, and what you guys are planning on doing. Is this it for you? Are you looking at this and saying, alright, this is perhaps the capstone of 20 years of working with low0cost carriers here in the US. I think this is probably the, the top of what we can do in terms of putting these guys together.
FRANKE: Yeah, well, so just to put it in some context, Indigo has significant and in fact control investments in about five, six airlines around the world and in this particular case, we were for many years, the controlling shareholder in Spirit and then we moved after it became public. We moved over to Frontier and have created an airline there that in combination with Spirit will create a very powerful market disruptive airline in the United States. And we think while it’s a fair, it’s fair to say it’s a capstone, it’s certainly not the end game, which is to enjoy the growth that we think is in front of the two airlines.
ANDREW ROSS SORKIN: Can both of you speak to the price issue because clearly the, the big issue in Washington is going to be whether prices remain low and can even go lower? Both of your airlines have, have been considered a pull if you will on the Deltas and Americans and others of the world. And so, the question I think in Washington is going to be whether that continues to be the case, whether it becomes, whether you’ll get a stronger argument, or ultimately whether margins get compressed.
CHRISTIE: Well, we think, again, I’ll say it again, I think you’re making the great point. What’s, what’s fantastic about this combination is the two businesses are 100% aligned on their strategy which is to continue to drive more stimulation with low fares. So, we’ve been doing that for the better part of 15 years here at Spirit and Frontier has been doing it for a long time as well and so the two companies combined can do that even stronger and better than they could apart. And so, you know, we’re talking companies that on average today have an average fare of around $54. And so, we do have a dramatic impact on the market and we want to continue to do that. We’ve got a lot of growth combined ahead of us and our objective is to continue to push for lower fares across the United States to stimulate more activity.
LEBEAU: Ted Christie, CEO of Spirit Airlines, along with Barry Biffle, CEO of Frontier Airlines and Bill Franke from Indigo Partners, Chair of Frontier Airlines who will be Chair of the new airline who ultimately will be able to be the person to tell us where this airline will be based, the CEO, the name. Can’t wait to hear all about it, Bill. Thank you, gentlemen, for joining us this morning, a “Squawk Box” exclusive. Becky, I’ll send it back to you. By the way, take a look at shares of Spirit. They’re up about 9% I think you mentioned on word of this potential merger.
