Have I been living under a rock… or has Spirit Airlines management been living under a rock? Maybe I just need to go to business school, or something, because the math ain’t mathing….
In this post:
Spirit claimed it would turn a profit this year?!?
Spirit has had a really rough several years. The airline hasn’t turned a profit since before the pandemic, and now has the worst margins in the industry. The airline was going to be saved by a JetBlue takeover, but a judge ultimately blocked that, in the name of preserving competition.
Then the company filed for Chapter 11 bankruptcy, which it emerged from within months. While that helped with some debt issues, it didn’t help with the pace at which the airline is burning through cash, given that Spirit didn’t renegotiate any labor contracts or aircraft leases, or do anything else to improve its prospects.
Let me be clear, I don’t want to rag on Spirit. I actually think Spirit is a great airline with overwhelmingly friendly employees, and it unfairly gets a bad rap. But I also know how to count, and if you’re running a lemonade stand where you’re consistently selling a product for $0.80 that costs $1 to produce, you’re not going to be doing that much longer.
So anyway, not surprisingly, Spirit has been burning through cash quickly, and recently the airline issued an alarming regulatory filing, casting “substantial doubt” on its ability to operate for 12 more months. The company’s CEO tried to downplay this, but again… math.
Here’s a detail I missed in all of this, as reported by CNBC. During its December 2024 bankruptcy court filing, the company projected a net profit of $252 million for 2025 (in contrast to a $1.2 billion loss in 2024). How did that work out? Well, in Q2 2025 (typically one of the strongest quarters of the year for airlines), the company had a net loss of $246 million.
Let me say that one more time — the airline expected an annual net profit of $252 million, and instead, lost nearly that much in what was supposed to be one of its best quarters. Admittedly there has been some economic uncertainty, but that doesn’t change the reality that unfortunately the carrier’s business model just doesn’t work anymore.
Aircraft lessors gauging interest for Spirit planes
In the same CNBC story linked above, it’s reported that Spirit’s aircraft lessors have started reaching out to airline executives at competing airlines, to gauge interest in potentially acquiring Spirit’s roughly 200 Airbus aircraft. Rumor has it, Scott Kirby asked if the planes come with any JFK slots (I kid).
It’s not surprising to see aircraft leasing companies simply getting ahead of a likely inevitability, and at this point, one wonders what level of interest there will be for these used planes at other US carriers. Pre-2025, I imagine that United would’ve been salivating at the thought of these, but we’re now increasingly seeing US carriers pull back capacity a bit, given the weakness in domestic demand. I’m sure there are plenty of points around the globe where there’s demand for these, but the US market seems trickier.
In a statement regarding all of these details, Spirit said the following:
“We will not comment on market rumors and speculation. Spirit Airlines is a critical part of the U.S. aviation industry, and we provide high-value travel options to the communities we serve. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. Our focus is on making the necessary changes to better position the company and build a stronger airline. We remain hard at work on many initiatives to protect our business, valued Team Members, partners and Guests.”
Bottom line
I never really understood Spirit Airlines’ plan after emerging from bankruptcy. Apparently the company projected a $252 million profit for 2025, despite having lost $1.2 billion the previous year. Instead, the airline lost $246 million in Q2 2025, which should’ve otherwise been one of the better quarters of the year.
Maybe I need to get out into the real world a little bit more and be more entrepreneurial, because if Spirit found new investors to throw nearly a billion dollars at the company for doing more of the same, well… imagine the possibilities!
This will be a packaged chapter 7 winding down and swallow by another carrier.
it will either be DL or F9. I suspect F9. Friday they are spirit. Monday they are frontier employees.
I suspect early October this will happen.
airplanes are global commodities but you have to survey the global landscape to see who can potentially take multiple fleets of 50+ aircraft. They have about 50 A320NEOs and another 50 or so A320CEOs.
They have about 30 A321NEOs and a couple dozen A321CEOs.
Their CEOs are powered by IAE engines, similar to what UA has while AA and DL use the CFM engines.
NK's 320 family NEOs are powered by GTFs, similar to...
airplanes are global commodities but you have to survey the global landscape to see who can potentially take multiple fleets of 50+ aircraft. They have about 50 A320NEOs and another 50 or so A320CEOs.
They have about 30 A321NEOs and a couple dozen A321CEOs.
Their CEOs are powered by IAE engines, similar to what UA has while AA and DL use the CFM engines.
NK's 320 family NEOs are powered by GTFs, similar to what DL and UA use but different from what AA uses.
keep in mind that UA has a massive number of aircraft on order. Taking someone else's broken airplanes doesn't give them any more airplanes sooner.
I don't think UA is interested. They have taken delivery of their last MAX 8 on order, which is about the same size as the A320 and have unequivocally said going forward they plan to have fewer flights with bigger planes.
They have MAX 9's, -10's, and a whole bunch of A321's, include 40 with CFM engines which will be leased, presumably as a stopgap until their MAX 10's A321's with the GTF come online.
"Rumor has it, Scott Kirby asked if the planes come with any JFK slots."
Spirit doesn't even operate out of JFK.
Did you see the part where he added “I kid”?
What's the joke?
It would've landed as a joke, if Spirit actually did have JFK slots.
NK's only path forward is to dump places, planes, and people.
FLL is a defensible hub. OA hubs to LATAM / Caribbean for both leisure and VFR do well where network carriers focus on premium customers and premium prices. However, that isn't enough flying for ~188 shells, so they are stuck flying other routes that make less sense.
There is a reason Sun Country makes money and is small.
One of the biggest problems Spirit has is everyone keeps forgetting about the 90+ aircraft that have gone through a long term grounding because of the Pratt & Whitney 1100-G engines. As of today at Goodyear, AZ (GYR) there are 35 aircraft in storage. Almost half their fleet is impacted. And the inspections will not happen quickly. This issue along will be more than enough to put this airline out of business. It's quite unfortunate...
One of the biggest problems Spirit has is everyone keeps forgetting about the 90+ aircraft that have gone through a long term grounding because of the Pratt & Whitney 1100-G engines. As of today at Goodyear, AZ (GYR) there are 35 aircraft in storage. Almost half their fleet is impacted. And the inspections will not happen quickly. This issue along will be more than enough to put this airline out of business. It's quite unfortunate as there are some fantastic people that work at Spirit Airlines
@ Jeff C -- Totally agree re: the great people at Spirit. But when margins are as bad as they've been at Spirit, is having planes grounded really that bad? I imagine that if all of Spirit's planes were flying, the situation might be even worse.
Ben,
yes, it has helped both B6 and NK to have aircraft out of service but Pratt and Whitney has been providing some compensation to airlines that have been impacted.
Jeff C,
yes, the pipeline to get those engines repaired is lengthy; P&W has to produce enough parts to fix the engines that need to be fixed while also supplying enough engines to keep Airbus' production lines moving; Airbus penalizes its suppliers that...
Ben,
yes, it has helped both B6 and NK to have aircraft out of service but Pratt and Whitney has been providing some compensation to airlines that have been impacted.
Jeff C,
yes, the pipeline to get those engines repaired is lengthy; P&W has to produce enough parts to fix the engines that need to be fixed while also supplying enough engines to keep Airbus' production lines moving; Airbus penalizes its suppliers that don't deliver according to their commitments.
just getting the parts is not all of the issue; there is a limited amount of MRO capacity that can be "flexed" to do all of these repairs- when parts become available.
Delta is the only airline MRO contractor for the GTF in the Americas; P&W has its own network but they are not going to stand up a bunch of capacity either on their own or via contractors to fix a bunch of engines hopefully once in a lifetime.
Part of the reason why I believe DL could have an inside edge - if it is interested - is that it can manage the engine repairs in line with its own maintenance capacity; it doesn't get to cut ahead of other airlines for parts from Pratt and Whitney but DL can prioritize its own engines.
Factor in the need to redo the interiors on most of NK's fleet and DL is likely to have a part in getting these aircraft back in service whether for NK, for other airlines, or for DL itself.
most of the industry hasn't adapted to the post-covid environment and NK didn't fix its basic problems in C11.
as for planes, there are lots of parties that are willing to take NK's planes but no one is going to put them in service the way they are currently configured. So, whoever takes them has to be able to let them sit for a year or more waiting for industry standard domestic seats.
The engines...
most of the industry hasn't adapted to the post-covid environment and NK didn't fix its basic problems in C11.
as for planes, there are lots of parties that are willing to take NK's planes but no one is going to put them in service the way they are currently configured. So, whoever takes them has to be able to let them sit for a year or more waiting for industry standard domestic seats.
The engines that work on NK's fleet do have value for a few airlines, again, as long as they have a shop that is capable of overhauling what doesn't work. Delta is one of the few airlines that is an authorized overhaul center for GTF engines.
This sounds like it was a pro forma, which at the end of the day is not worth the paper it's written.
The only plan was for another chapter 11 case in a few more years with a more merger friendly administration.
@ Peter -- Well, a $350 million cash injection when you're losing $1.2 billion per year won't exactly give you a few more years!
Ha. Perhaps I should have said a couple more years? One more year? Can always get more funding outside of another bankruptcy. But they filed right after the election and emerged shortly after the new year when there wasn’t a real plan and not much clarity from the new regulators. Clearly the investors are not interested in a Frontier merger, and think that something more like a B6 merger (which the prior administration rejected) could...
Ha. Perhaps I should have said a couple more years? One more year? Can always get more funding outside of another bankruptcy. But they filed right after the election and emerged shortly after the new year when there wasn’t a real plan and not much clarity from the new regulators. Clearly the investors are not interested in a Frontier merger, and think that something more like a B6 merger (which the prior administration rejected) could get done now. So they made up some projections, everyone held hands and agreed they were plausible (Court doesn’t care if all the creditors don’t object), emerged from bankruptcy, and they’ll file again this Christmas or next Christmas.
The good news is that their planes already look like sticks of butter, which will help with all of the buttering up that is about to occur.
Business plans and projected profit can be wishful thinking. So the $252M profit.... I'll wait and see it.