Spirit Airlines is going bankrupt. This rival is already reaping the benefits.

By Claudia Assis

A network overlap is likely going away

About 35% of Frontier's network overlaps with that of Spirit Airlines.

One airline stands to gain from Spirit Airlines' recent bankruptcy filing, analysts at Deutsche Bank said Tuesday as they took the relatively rare step of doubling their price target on that beneficiary's shares as they upgraded their rating.

Frontier Group Holdings Inc. (ULCC) is "best-positioned to be the biggest beneficiary of Spirit's bankruptcy given their network overlap," the analysts said.

The bank rated Frontier's stock as a buy, up from hold, and raised its price target on the shares to $8, up from $4, implying a 44% upside over Tuesday's price.

About 35% of Frontier's network overlaps with Spirit Aviation Holdings Inc.'s Spirit Airlines (FLYY) for the July-to-September quarter, and that overlap should increase to about 40% by the fourth quarter given Frontier's plan to add some 20 new routes later in the year, of which 18 are currently served by Spirit, said the analysts, led by Michael Linenberg.

Spirit filed for bankruptcy late Friday for the second time in recent months.

Chief Executive Dave Davis said in a statement that there was "much more work to be done and many more tools are available to best position Spirit for the future." Spirit emerged from bankruptcy in March after a filing late last year.

"Spirit is expected to materially scale-back its operations" and will likely end up with a much smaller fleet, generating surplus aircraft, the Deutsche Bank analysts said.

Downsides to Frontier's buy rating include a worsening economy and rising operational costs, the analysts said.

Spirit first filed for bankruptcy shortly after talks of a possible merger with Frontier broke down in November.

Spirit had been seeking a lifeline after a planned merger with JetBlue Airways Corp. (JBLU) ended with no deal. JetBlue decided in March 2024 to abandon plans for the deal after regulators sought to block the merger.

Budget airlines' low fares appeal to travelers with more limited incomes - who at the moment may not be traveling by air, if at all.

The low-cost and ultralow-cost airlines also face increasing competition from the larger carriers, which have added their own highly restricted, stripped-down "basic economy" fares that struck at the core proposition of the budget airlines.

Frontier's stock has lost about 22% this year, compared with gains of about 3% for the U.S. Global JETS exchange-traded fund JETS and of around 9% for the S&P 500 SPX.

-Claudia Assis

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09-02-25 1530ET