While it’s not over until it’s over, all signs point toward Spirit Airlines ceasing operations in the coming hours, after what can only be described as a wild ride…
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Spirit Airlines runs out of cash, likely to shut down imminently
The Wall Street Journal reports that Spirit is preparing to stop flying, as the carrier has run out of cash, and has failed to reach a deal on a planned $500 million government bailout.
For context, Spirit is in Chapter 11 bankruptcy for the second time in two years. In recent weeks, we’ve known that the airline was on the verge of liquidation. The carrier’s financial situation was bad in the first place, but was only made worse by the the increase in jet fuel prices, which caused the company to burn through its little cash at an accelerated rate.
Spirit had asked for a government bailout, which was a concept that the Trump administration got behind, illogical as it may be. The plan was for the Trump administration to give the airline $500 million in funding, which would ultimately convert into taxpayers having a 90% stake in the airline.
However, it’s clear those negotiations fell apart in recent days. It appears that Spirit bondholders weren’t onboard with the plan, which is logical enough, from their perspective. That’s because a bailout would put the government ahead of other bondholders in terms of priority for the carrier’s assets. And with Spirit almost certainly continuing to lose money, there was virtually no upside to this plan for existing bondholders.
So with the rescue plan not coming together, and the airline running out of cash, the expectation is that operations will cease in the coming hours. Stay tuned…
Spirit’s failure is a sad but overdue development
With Spirit likely ceasing operations, it’s incredibly sad to see so many people potentially losing their jobs. Spirit has some really great employees, and they’ve acted with such professionalism, despite the incredible challenges they’ve faced.
I have nothing but respect for them, and hope they all find other jobs in the industry in the near future. People of course often make fun of Spirit’s customer profile (unfairly, I think, but that’s besides the point), but seriously, Spirit has some of the industry’s nicest employees, especially the flight attendants.
Propping up a failing airline for years on end just doesn’t accomplish anything, and my hope is that this development means that other airlines, like JetBlue and Frontier, have a better chance of survival. In particular, this leaves a huge gap in Fort Lauderdale (FLL), Spirit’s biggest station, so let’s see who fills that.
I don’t want to get too far ahead of myself here, so let’s first see what happens in the coming hours. It goes without saying that there will likely be a lot of capacity adjustments from other airlines to fill in to reflect the new reality.
Bottom line
Spirit Airlines is reportedly hours from ceasing operations, after a $500 million government bailout of the airline ultimately failed. Spirit has been in Chapter 11 bankruptcy twice in the past two years, the airline hasn’t turned a profit in seven years, and it has the industry’s worst margins.
While I’m really sad to see the airline potentially ceasing operations, this was ultimately inevitable, as you can only sustain these kinds of losses for so long. This at least spells good news for carriers like JetBlue, given the markets in which they compete. Competition is important, but so is a healthier industry where most airlines aren’t hemorrhaging money.
What do you make of Spirit potentially ceasing operations?
Still seems to be operating smoothly as of now, only 4% of their flights were cancelled today and plenty are in the air.
Hah! The next big firm to go to the wall under Trump’s new American economy. Suck it Donny, you’re a garbage businessman.
As a Ft. Lauderdale resident, I only feel sorry for the employees. Otherwise, am glad this flying mess is kaput. I just hope UA or DL will seize the moment and at least make FLL a focus city, so we can have some decent choices instead of the dreadful WN or AA's hub in MIA.
I am suspect of the reality (or need) for anyone to materially pick up the slack with an en banc move into FLL or any NK station. The Caribbean/Latin capacity from FLL is probably best backfilled from AA/DL/UA hubs--it's not an operation a legacy carrier wants to inherit, IMHO. Even if DL or UA had visions of building a long-haul gateway at FLL--the investment horizon and near-term cannibalization risk to their established Latin American networks...
I am suspect of the reality (or need) for anyone to materially pick up the slack with an en banc move into FLL or any NK station. The Caribbean/Latin capacity from FLL is probably best backfilled from AA/DL/UA hubs--it's not an operation a legacy carrier wants to inherit, IMHO. Even if DL or UA had visions of building a long-haul gateway at FLL--the investment horizon and near-term cannibalization risk to their established Latin American networks point to no, IMHO, but would love to see a bold move by either one!
Much of the domestic operation is best served by the likes of G3 and F9. Maybe B6 adds some frequencies/destinations they believe to be higher margin than the speculative Northeast-Florida adds they have been pursuing. Less likely, AA and DL pick off some of the most profitable destinations, but can see interest from them and UA in gates to bolster hub frequencies from FLL (and MIA).
At LGA, maybe AA and WN fight for slots--AA could really use them to bolster their NYC position. Maybe WN takes another stab at EWR service.
As far as planes, what is unencumbered is likely unwanted by anyone that can afford them, so I suspect they end up with foreign carriers or maybe some to G3.
"...with an en banc move into FLL or any NK station."
You didn't mean to say "en banc," did you?
Ha! was thinking "In toto" and that came out!
Thank you! I was wondering, and I couldn't fill in the blanks! :)
The online TDS comments have already begun as though Trump is somehow responsible for Spirit's moronic business model. I see Frontier going down the same path. You can't lose money on every ticket and make it up in volume. No matter what Professor Mamdani would like you to believe.
The employees have known for quite a while this could be the outcome. If they were not out applying for jobs and going on interviews that's...
The online TDS comments have already begun as though Trump is somehow responsible for Spirit's moronic business model. I see Frontier going down the same path. You can't lose money on every ticket and make it up in volume. No matter what Professor Mamdani would like you to believe.
The employees have known for quite a while this could be the outcome. If they were not out applying for jobs and going on interviews that's on them. Very different from when your employer calls you into a meeting with HR and you're told you're "redundant."
"The online TDS comments..."
LOLOLOLOLOLOL!!!!!!!1!!!!11!!!!!!!!!
TDS isn’t as bad as OTL…
If you know Trump's records instead of his rhetoric, he has never had empathy for the poor. It is indisputable that Spirit is at the bottom of the totem pole of domestic airlines.
Both China and the US have free market. However, China is a communist country while it is questionable that the US is democratic today. China is not a capitalist country because the Communist Party has a tight grip on the government...
If you know Trump's records instead of his rhetoric, he has never had empathy for the poor. It is indisputable that Spirit is at the bottom of the totem pole of domestic airlines.
Both China and the US have free market. However, China is a communist country while it is questionable that the US is democratic today. China is not a capitalist country because the Communist Party has a tight grip on the government without outside interference, at home or abroad. The US is the leader of democracy, not in the free world, in the western world only. Paradoxically, when the federal election costs in the tune of hundreds of millions and billion dollars, while the congressional elections cost in the tune of tens of millions dollars, the federal and state governments are emphatically neither free nor democratic. They are bought and sold on open market. The government still picks and chooses winners and losers in all industries, contrary to the "laissez faire" capitalism. Crony capitalism best describes US capitalism.
I knew it.
Delta had insider information.
DL cut their beverage service just a day before their competitor cease operations.
They havent turned a profit in years, and were in chapter 11 two years ago (under a different president), and still couldnt turn around. why is this anyones fault other then Spirit, there business model is a failure. Welcome to the free market.
Enough with the political blame game! The only one to blame is Spirit!
Good, let it die. I liked Spirit but nobody wants a zombie airline
One thinks of all of the staff who will lose their jobs. All of the outside contractors who service the needs of the airline too. One hopes that the accumulated skills will not be lost forever.
Time will tell if Mr ‘rump is blamed for the impending doom and gloom being forced upon the American people and the world at large.
Is this truly the end of Spirit Airlines jokes?..
President Trump is saying a final proposal was submitted. If a miracle happens would it not be challenged in court by Frontier or B6? Maybe even by airline transport association? Sad to see those jobs go.
Has anything popped up on bankruptcy court calendar? Would a final hearing take place?
Thank you
"Propping up a failing airline for years on end just doesn’t accomplish anything"
I disagree, it keeps Spirit fliers off of other flights. Passenger quality is about to plummet on other airlines. Or perhaps they will just be priced out.
What does "passenger quality" mean?
Define that for us, please. Don't be shy (scared), dare yourself to say what you mean here.
I'll answer it. Dirtbags come in all colors. Sorry your delusions won't be fulfilled.
I'm hoping they go back to Greyhound.
Sad day for the workforce and outside contractors alike. One hopes that all the skills are not lost forever.
In years to come we might all look back and regret everything that Mr ‘rump has tarnished.
Is this a victory for people who don't like Trump? Trump wanted to save the airline and buy it.
No, this is a victory for ALL Americans as they won't be on the hook for the huge losses Spirit would incur in their future operations. Rejoice!
@Saunders, then he should have used $500m from the $3B wealth gain he got during his first 15 months of presidency, to buy it. Why should American tax payers be on the hook to save private companies. I thought US is a free market economy.
Thousands of jobs lost, higher fares, secondary markets shuttered.
Thanks democrats.
@Mel keep saying it. Eventually someone will believe you. Had Frontier or JetBlue bought Spirit we’d still be here. They’re the next airlines to fall.
No. Thank capitalism and free markets. This is exactly how the game works. The market dictates winners and losers. And the market said that the Spirit business plan is not feasible.
Lmfao blaming the democrats when your party has all 3 branches of government is not even funny... it's sad. Sad that you've allowed yourself to be so brainwashed by literally the worst people in our society.
Right! Because when the democrats controlled all three branches they never blamed republicans when things didn't get done. Take off your blinders.
Spoiler alert Mel:
1. A judge declined the merger
2. They had a right to appeal. They did not.
3. President Trump’s wars caused prices to skyrocket.
4. His bullying on Tariffs caused global economic instability.
5. Spirit’s business model was a failure.
6. This 500 million is nothing compared to the 20 billion the farmers need. Plus another trillion to the pentagon since we are out of weapons.
...
Spoiler alert Mel:
1. A judge declined the merger
2. They had a right to appeal. They did not.
3. President Trump’s wars caused prices to skyrocket.
4. His bullying on Tariffs caused global economic instability.
5. Spirit’s business model was a failure.
6. This 500 million is nothing compared to the 20 billion the farmers need. Plus another trillion to the pentagon since we are out of weapons.
7. Stop blaming dems, transgender, DEI and immigrants for problems Trump created.
surely its the muppets that voted for trump that are to blame? had he not won, the nonsense in iran wouldnt have happened
NK was circling the drain before Trump, genius.
Mel,
A judge declined the merger. They had a right to appeal. They did not. Trump’s unstable tariff policies and his wars helped with Spirit’s demise along with a failed business model.
Stop blaming dems, transgenders, DEI and immigrants for problems President Trump caused.
Mel - name one "secondary market" that NK operates into that will be "shuttered." Just one - name it.
I'll do it for you - zero. Spirit isnt like Breeze or EAS flights that operate into airpots with no other service. FLL LGA or even PNS FLL are hardly secondary markets that are going to be shuttered. OK, maybe the ACY MYR flight will be missed...
Why don’t you bloody cough up some money and run this LOWEND LOWCLASS airline
Remember, people who pretend to be conservatives are supposed to pretend to support the free market.
I guess, their current customers are also screwed with no way of getting their money back for upcoming flights.
This is why you always pay with a credit card. so you can get your money back
That was my first thought, but not sure if they'll deem this as a valid reason for a chargeback? I mean they could be on the hook for millions and its not like they have anyway of getting that money back from Spirit.
This is 100% not true. Chargebacks work when an airline stops operating.
Ben, any advice on what people who have Free Spirit miles should do? Presumably, they're about to become worthless. Redeem for anything non-Spirit-travel they can? (i.e., hotels, rental cars, merchandise)
I have the same question, it doesn’t seem to be able to be redeemed for anything else though as far as I can see.
They will be worthless as soon as the airlines shuts down so too late now. You had many months of warning that a liquidation was coming.
You should quickly apply for their credit card the very last chance to get SUB.
looks like the bailout critics were right all along