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Spirit Airlines appoints new CEO

Spirit Airlines, Inc. on Tuesday named board member Robert Fornaro as chief executive officer (CEO) in a move analysts say may nudge it towards a merger with Frontier Airlines and improve its results after a year of unit revenue decline.

Fornaro headed AirTran Holdings, Inc. for nearly four years until Southwest Airlines Co. bought it in 2011. Analysts say his record of deal-making may in the long run seal a merger of Spirit and Frontier, which have a common low-cost model and plane types.

Shares of Spirit were up nearly 6 percent at the close of trading. The US carrier has grown rapidly in the past five years by marketing, ultra-low fares with heavy restrictions. Recent moves by larger Delta Air Lines, Inc. and American Airlines Group, Inc. to match those prices have hurt its unit revenue and slashed 46 percent from its stock in 2015.

Fornaro replaces Spirit’s decade-long leader, Ben Baldanza, who will assist with the transition, the company said in a news release. The reason Baldanza left was not immediately clear. A tie-up of Spirit and Frontier would give the carriers scale to “compete better against larger airlines by leveraging cost efficiencies,” Wolfe Research analyst Hunter Keay said in a note Tuesday.

Baldanza has said Spirit did not need a merger to grow, according to the note. The managing partner of Frontier’s owner Indigo Partners, Bill Franke, has said he expects low-cost airlines in the United States to consolidate. Indigo sold its stake in Spirit before buying Frontier in 2013.

A decline in fuel prices last year allowed larger carriers, which have high costs associated with long-haul flying and premium-cabin travel, to profitably chop their fares in line with Spirit’s.