We know that Spirit Airlines is on the verge of liquidation, as the airline is in Chapter 11 bankruptcy for the second time in two years. Over the past week, we’ve learned that the government is planning on bailing out the airline.
President Trump claims he doesn’t want the jobs to be lost, so he plans to use the Defense Production Act to give the airline a $500 million lifeline, which will likely ultimately result in the government owning a 90% stake in the airline, given the rate at which Spirit is burning through cash.
While I hate the thought of Spirit employees losing their jobs, the airline has been losing money since before the pandemic, and unfortunately I believe it’s time to let the company just die, and focus on healthy competition. It’s one thing if this were just a temporary issue due to high jet fuel prices, but this is a much bigger structural issue than that due to how the industry has evolved.
In this post:
An odd argument in favor of bailing out Spirit Airlines
Kyle Stewart at Live and Let’s Fly writes a post titled “Why The Government (Morally) Has To Save Spirit Airlines.” I certainly get the impression that Kyle is a MAGA fan, which is fine (you’re free to call me a socialist who wants the government to get involved in everything — oh, wait). 😉
I only mention that because I’m not sure where this argument falls on the spectrum of sincerely held beliefs vs. something that makes a good headline and is an attempt to play devil’s advocate. He argues that he’s “not generally a bailout guy,” and “companies should be allowed to fail.”
But that doesn’t apply to Spirit. Kyle’s argument for having a moral obligation to bail out Spirit comes down to the following main points:
- The Department of Justice under the Biden administration blocked JetBlue’s takeover of Spirit, and therefore it’s largely Biden’s fault that Spirit is in the situation it’s in
- There’s precedent for a bailout that serves taxpayers, because when the auto industry was bailed out, the government invested around $80 billion, and a study found that the bailout saved 1.5 million jobs and preserved $105.3 billion in tax collections
- Amtrak is government subsidized, and is a form of national passenger transportation, so if rail is a public necessity, why would an ultra low cost carrier not be?
- Spirit’s assets are worth something, so that has to be factored into the math as well in terms of saving the airline, because this shouldn’t actually cost taxpayers the full amount
Why I disagree with the concept of “saving” Spirit Airlines
I fully agree with Kyle that the Department of Justice under the Biden administration shouldn’t have blocked JetBlue’s takeover of Spirit. It was the wrong decision, and it failed to take into account that Spirit no longer had a viable business model (admittedly Spirit’s executives and lawyers did a very poor job making that case).
That being said, we also have to be realistic — it’s a blessing for JetBlue that the Spirit takeover was blocked, or else the combined airline would almost certainly be in Chapter 11 bankruptcy right now, if not worse. This was a merger where 1+1=1.5, and not 1+1=3. And when they’re both money losing companies, that’s not pretty.
JetBlue also hasn’t turned a profit since before the pandemic, the airline is approaching $8 billion in debt, and the company isn’t that far off from a bankruptcy filing. It’s not like this would be a healthy company if the airlines had been able to combine, since it was a bad merger idea in the first place.
The issue with Kyle’s argument is that Spirit is burning cash at a very fast pace, and there’s no sign of that stopping. Seemingly the only thing that Spirit can do to slow down cash burn is to keep shrinking, and that costs a lot of jobs as well. Beyond that, here’s why I don’t agree with this argument:
- There’s a huge difference between Amtrak (the only national rail service) and Spirit (one of many airlines in the country, which largely overlaps with other airlines in the market)
- Kyle simultaneously argues the government should save Spirit because ultra low cost carrier competition needs to survive, but then also acknowledges that Spirit will likely be sold off for its assets, so that would do nothing to actually preserve competition
- Kyle argues that “Spirit leases its aircraft but there’s no question the leased assets are in demand,” but that’s not really true; I mean, Spirit has a bunch of planes already parked in the desert that are available to other airlines
I would agree with Kyle’s take if I believed Spirit’s issues were due to something very temporary (like the increase in jet fuel prices… something he doesn’t reference), in which case I could see merit to the support. But just pouring more money into an airline that has been through bankruptcy twice, and which continues to burn money at an alarming rate, serves no one.
If Spirit’s assets were worth anything meaningful, why haven’t other airlines bought them yet, as the opportunity has been there? And if you start selling assets, how does that save jobs?
I can’t ask this often enough — is this about saving jobs and preserving ultra low cost carrier competition, or is this about selling off the airline for its assets, and having another airline acquire it? Because those two points seem at odds with one another.
I’d just love someone to actually lay out how they see this playing out. Given the rate at which Spirit is burning through cash, the airline would burn through $500 million in a matter of months. The government would then be left owning an airline that loses a lot of money… then what?
Bottom line
I hate that Spirit is on the verge of liquidation, and that lots of people could be looking at losing their jobs soon. However, the airline is now in Chapter 11 bankruptcy for the second time in two years, the airline hasn’t turned a profit in seven years, and it also has among the worst margins in the industry.
This isn’t like Amtrak, which is the only rail service in the country. This also isn’t a matter of the government giving a loan that bridges some gap due to extraordinary circumstances. Instead, this would be the government soon owning the airline with the worst margins in the industry, and with very few assets.
For so long, Spirit tickets have been subsidized by shareholders, who lost their shirts with the airline. Let’s not do the same to taxpayers.
What do you think — does the government have a moral obligation to save Spirit?
Trump finally does something to help black people and ya'll go crazy. SMDH
Ben, this is absolutely correct. Spirit as it is currently composed is not viable—thus, the duo Chapter 11s. While there is market demand for ULCC, the MBAs will need to figure out some way to deliver that w/o torching shareholder or taxpayer dollars. The latter shouldn't even be considered. Interestingly, I'd love to see a write up on why the ULCC carrier model works in Europe and Asia, but not US.
ULCCs in Europe have a similar advantage to Allegiant (and unlike Spirit or Frontier) in that they are not competing with the legacies on a significant number of routes and even entire airports that they operate out of. Add in lower cost structures, and they actually know how to make the business profitable. They find niches that work and stick to them.
it’s now been nearly 50 years of deregulation. Many carriers have failed, many carriers have succeeded, and many low cost and ULCC carriers have developed by creating niches that capitalize upon short term gain, but failing to transform and adapt to maintain a business model of economic sustainability.
Is this the fault of the airlines who have adapted to maintain a business model of economic sustainability? I think not. It’s pure failure of low-cost...
it’s now been nearly 50 years of deregulation. Many carriers have failed, many carriers have succeeded, and many low cost and ULCC carriers have developed by creating niches that capitalize upon short term gain, but failing to transform and adapt to maintain a business model of economic sustainability.
Is this the fault of the airlines who have adapted to maintain a business model of economic sustainability? I think not. It’s pure failure of low-cost and ULCC’s to shore up their businesses to manage through when times are challenging. One cannot compensate executives at the top of all airlines in the same manner as Legacies who do find ways of shoring up their businesses to mitigate and weather the rough world socioeconomic lean times until better times come along. Airlines like these low-cost and ULCC’s asking for money are nothing more than failures of management and failures of management market timing. This I know is a tough lesson to learn for those execs coasting on the success of good times rather than providing true stewardship and guidance of an airline business, legacy or low-cost.
@Ben, you are 100% correct. Keep writing this to refute MAGA world's views of "saving Spirit" which is nonsensical. Keep doing what you are doing!
Having worked in the airline co-brand space for 17+ years, I also assess this from a loyalty program perspective: Spriit (and JetBlue) have no hope to monetize their loyalty program to AA/DL/UA's level. And I reglarly fly Spirit / JetBlue so I'm a fan! Just not a fan of...
@Ben, you are 100% correct. Keep writing this to refute MAGA world's views of "saving Spirit" which is nonsensical. Keep doing what you are doing!
Having worked in the airline co-brand space for 17+ years, I also assess this from a loyalty program perspective: Spriit (and JetBlue) have no hope to monetize their loyalty program to AA/DL/UA's level. And I reglarly fly Spirit / JetBlue so I'm a fan! Just not a fan of their current business model.
The LCC model in US is hopeless vs. Europe / Asia partly because (1) AA/DL/UA's basic economy fares have rendered US LCC's to be redundant, (2) other US fliers love their AA/DL/UA loyalty miles, and (3) the airline cost structure in US just cannot sustain LCC's.
And for those who say "Spirit and Frontier provides competition to UA/DL/AA" Well, let me say that on FLL-NYC routes (which I regularly fly), UA/DL/AA doesn't view NK (and less so B6) as competition anymore since UA/DL/AA doesn't even bother to compete with NK's ultra low fares!!
While I do not necessarily think that Spirit should be saved, I equally think it is "hit or miss" in that there are several examples of sometimes the government helping and not others.
Do you think Trump is of the government? Or a self-rider? From all those executive orders it is a wonder if there is a government.
Mr ‘rump let the genie out of the box and must now pay the price for his folly …. yes?
lol I love that Kyle is catching it for the ridiculous article he wrote. He writes so much garbage though it’s impossible to take anything he says seriously. He come across as fool.
Kyle has the worst takes all the time. Sunday over at LALF is a day for just Kyle to spew his anal leakage about whatever.
You are incredibly bias in your posts about Spirit. Maybe you could try a little harder to give multiple perspectives?
@ Hunter -- What other perspective would you like me to give? I'm a big fan of Spirit, I think the airline has great employees, I think it unfairly has a bad reputation, and I wish the business model were successful. But various shareholders have been unsustainably subsidizing the airline for seven years, so what do you propose, exactly?
First of all, Kyle Stewart is total MAGA. His nose is so far up Trump’s arse that he blows his nose with orange charmin instead of Kleenex. Like most MAGAts, he surrenders any modicum of principle he otherwise held to support the Mango Mussolini. I’ll bet you every dollar I have that if Biden (or Obama or anyone with a D next to their name) had proposed the identical idea under the same or similar...
First of all, Kyle Stewart is total MAGA. His nose is so far up Trump’s arse that he blows his nose with orange charmin instead of Kleenex. Like most MAGAts, he surrenders any modicum of principle he otherwise held to support the Mango Mussolini. I’ll bet you every dollar I have that if Biden (or Obama or anyone with a D next to their name) had proposed the identical idea under the same or similar circumstances, MAGAts like Kyle would be screaming socialism at the top of their lungs and doing everything to stop this bad idea.
Your creepy fixation with nether regions is telling. Keep it clean or keep it zipped.
Obviously you’ve mistaken me for someone who cares what you think. And you can shove your opinion up your ass or any other hole. You don’t seem to have a problem with body parts when Trump is shoving them inside teenage girls.
The era of the Op Ed has begun.
Kyle once wrote that he, as a renter, contemplated to rent out the place on AirBnB for extra income. I stopped reading his writings since then because I do not want to waste my limited brain cells and shoot up my blood pressure on such a retarded take. The best response to any moronic rhetoric is silent treatment because the provocateur will feel ignored and neglected. He has not improved over the years.
Politicians...
Kyle once wrote that he, as a renter, contemplated to rent out the place on AirBnB for extra income. I stopped reading his writings since then because I do not want to waste my limited brain cells and shoot up my blood pressure on such a retarded take. The best response to any moronic rhetoric is silent treatment because the provocateur will feel ignored and neglected. He has not improved over the years.
Politicians have decency and morale? That truly insults our knowledge. There have been suggestions that saving 14K jobs is worth the effort. How about tens of thousands federal employees who were fired by DODGE in the first quarter of this year? Are they chop liver? The majority of them are experts in their fields for decades that required education, training and experience.
Others explain that it provides those who live in remote areas the means of affordable and reliable transportation. Agree. Chances are your state is among the most remote poorest red states in the country. You ask us to subsidize your livelihood at the same time displaying the contempt and resentment to those of us who work hard for, earn and enjoy our living standard by labeling us elites, liberal and corrupt. Learn from us and work hard like us to afford yourself the livelihood that we have. Don't wait for us to hold your hands and lift you up without putting any effort to better your state. Most of all, do not impose your failed policies in your state on national level that will turn the country like your state. Who will bail out your state? The country did not elect a competent president since Kennedy. Like western provinces and Ontario in Canada, we residents of blue states contribute the most tax receipts to the federal treasury since the country's statehood.
First, I totally agree with letting Dpirit disappear. I unsubscribed from Live and Let’s Fly. I never pinpointed a political agenda - but rather the writing favored those airlines who frequently provided upgrades or status extensions.
How is this rebuttal and every commenter who is against Kyle’s position completely ignoring the overriding point that Kyle was trying to make: Spirit was denied participation in the free market when their merger was blocked on the basis that Spirit was needed as an entity in the said marketplace. Every other merger since the early 90s was approved, except for this one… on the basis that they are a necessary entity in the market…....
How is this rebuttal and every commenter who is against Kyle’s position completely ignoring the overriding point that Kyle was trying to make: Spirit was denied participation in the free market when their merger was blocked on the basis that Spirit was needed as an entity in the said marketplace. Every other merger since the early 90s was approved, except for this one… on the basis that they are a necessary entity in the market…. At that point it’s not even a debate of whether or not the government has the obligation to ensure their survival. This mandate was set when Judge Young denied the merger.
And the notion that a combined JetBlue and Spirit would just be in bigger trouble now is ludicrous. JetBlue and Spirit were major competitors at least up until spirit started parking airplanes en mass earlier this year. There is no way one can say where exactly a combined JetBlue would be without each others competitive pressure.
@ Yoman -- You're suggesting that the government has the mandate to ensure Spirit's survival because a judge ruled that maintaining ultra low cost carrier competition is essential? Because if so, Trump's solution doesn't address that either. Trump claims he hopes to sell Spirit to another airline at a profit, meaning it would be absorbed. It wouldn't preserve the competition that the judge wanted anyway.
ATT T-Mobile blocked, Pfizer Astra Zeneca, Lockheed Aerojet Rocketdyne, Kroger Albertsons. The list goes on and on of M&A blocked by the government.
Northeast alliance with B6 and AA was blocked.
Trump has this friend who is a management expert. If Spirit just needs better management, why not call the guy who bought Twitter for $44 billion, because he knew he could manage it better? Or did he do it, just out of moral obligation? Sadly, the journalists are so busy partying in DC that they don't have time to call Elon and ask him what he thinks. Or to call Spirit's competitors (Frontier, Allegiant, etc.)...
Trump has this friend who is a management expert. If Spirit just needs better management, why not call the guy who bought Twitter for $44 billion, because he knew he could manage it better? Or did he do it, just out of moral obligation? Sadly, the journalists are so busy partying in DC that they don't have time to call Elon and ask him what he thinks. Or to call Spirit's competitors (Frontier, Allegiant, etc.) and ask them if they need any moral-obligation money themselves. Or maybe just a loan guarantee so they can take over Spirit.
If Jobs Preservation is *actually* the motivating consern, where is the government intervention on the nearly 100,000 tech jobs that have disappeared before we've closed the first trimester of 2026?
By that logic, there should be calls to nationalize Meta, Microsoft, Amazon, etc...?
If jobs preservation is actually the motivating concern, why has the government fired tens of thousands of employees in the past 16 months?
Socialism with MAGA characteristics
Ironically, Trump is the most socialist president in my lifetime. National socialist.
*facepalm*
I did not see *that* coming!
It's certainly not anywhere in the realm of proper way to use the Defense Production Act. But in general, it's just a badly run company and concept that hasn't worked in years. The moral obligation is to have it shut down cleanly, not "save it".
Give the government a break, this is about vital American infrastructure. Kamala and the Democrats would have been spending it on useless girly stuff with no economic value like child care. I also agree with more railroad construction.
If you think child care has no economic value, you should have a look at how much those who have it for sale are charging for it.
But perhaps you failed to include a snark tag.
I see pros and cons. If this was Biden, would your opinion be different?
It would be the same. He’d just be less animated about it. Look at the article he wrote when the jet blue merger was blocked. It wasn’t INSANITY, or whatever.
@ John L -- My opinion would be the same, and I was vocal in criticizing Biden for blocking the merger.
Didn’t a federal judge block the merger? Didn’t Spirit and JetBlue have a right to appeal? And they did not appeal?
If President Trump really cared about Spirit and its employees, maybe he could sell that $200 million 747 he was gifted from the Qatari’s.
Next, fake crisis.
The spend for the" free " Qatari 747 upgrade now will be about one billion and ready to handover to the air force around September of this year. FML.
Long time reader. But could please quit posting about Spirit. You fly for fun (Hobby) and have no idea that some people need the ULCC to get to places at a lower cost. I understand you need for OMAAT to have traffic. However, lately it’s like reading headlines from the National Enquirer while standing in line to pay at the Grocery store. Thanks Lucky
Ps. Banks,AIG, and Chrysler were bailed out.
VFTW 2. It's not going to change. You simply need to pass over articles you don't like.
Jack is correct. Engage or ignore. And, Gary’s doing just fine. Take it or leave it.
"You fly for fun (Hobby) and have no idea that some people need the ULCC to get to places at a lower cost."
Except that your ULCC fare is subsidized by shareholders, debt holders, & credit card programs and you're now asking the taxpayer to subsidize your low fare since the business model clearly doesn't work.
No. Your cheap fare doesn't need to be subsidized by the taxpayer. If Spirit could've raised their fares...
"You fly for fun (Hobby) and have no idea that some people need the ULCC to get to places at a lower cost."
Except that your ULCC fare is subsidized by shareholders, debt holders, & credit card programs and you're now asking the taxpayer to subsidize your low fare since the business model clearly doesn't work.
No. Your cheap fare doesn't need to be subsidized by the taxpayer. If Spirit could've raised their fares to NOT be subsidized by the taxpayer or others, they would've done so but it's the problem with the company they've built -- no one wants to fly Spirit at a higher fare that makes their business model sustainable.
REPEAT AFTER ME -- YOUR LOW FARE SHOULD NOT BE A GIFT FROM UNCLE SAM
@ Cbchicago -- Of course low fares are important, I agree with you. But I'm not understanding what you're proposing, given that (as MaxPower points out), Spirit's fares have been subsidized by shareholders for seven years now. Should taxpayers directly subsidize Spirit fares indefinitely, or what is the proposal to have Spirit stop losing money?
Spirit shouldn't be saved by the government. Neither should have Intel.
But when people say "I don't want my tax dollars to go towards their bailout". You do realize you have zero say where your federal tax dollars go today, right? Never had a say, don't have a say and will never have a say. The government will misuse your funds for whatever they want, much like they've done social security. Watcha gonna do about it?
I am a big fan of MAGA. 90% of what MAGA does is fantastic. 90% of what Biden and liberals do is very destructive. But I agree strongly in every way with Ben on this.
Kyle can't write logically, either. I stopped reading when I got to the misused "selective."
He needs to study rhetoric, and stop "writing" until he does so.
Meh, Kyle’s doing alright. We all typo sometimes. I don’t necessarily agree with his hot-take here, but… might as well throw it on the pile. Bah!
I love Matthew at Live and Lets Fly, but the sunday content is not great. Kyle seems to not have much upstairs, with all due respect. He did blunder his AC biz class trip and not go to the Signature Suite after all?
Agreed, Kyle reflects very poorly on Matthew's operation of the blog. For Matthew to continue to have Kyle post things on his website just makes me think Matthew is a poor manager and/or bad judge of writing character as Kyle adds absolutely nothing of value to the site, yet Matthew continues to make the same mistake of keeping him around.
I agree with your comments about Kyle. When he posts things, I just don't read them anymore. Not well written and usually not thought out. Matthew is a lawyer by education. When I was working as an HR Leader specializing in Employment Law, I worked with a bunch of inhouse employment lawyers. They were great at giving me advice and talking points. But when they had their own internal staff issues, rarely would they address...
I agree with your comments about Kyle. When he posts things, I just don't read them anymore. Not well written and usually not thought out. Matthew is a lawyer by education. When I was working as an HR Leader specializing in Employment Law, I worked with a bunch of inhouse employment lawyers. They were great at giving me advice and talking points. But when they had their own internal staff issues, rarely would they address them. They could give the counsel to others but not follow their guidance for their teams. Not a criticism, but rather an observation after being in that type of role 40+ years.
If you disagree on-topic, by all means, make your specific counter-point, but not-so-subtly attacking other’s intelligence is weak at best of you.
The government has no moral responsibility to bail any company out. In this case, Spirit could be saved along with 14,000 jobs that have a massive multiplier effect. That’s a strong reason to bail them out. Clearly spirit has a bad business plan. But so did Chrysler in the 1980s and they re paid the loans and re structured their business plan and survived until the financial crisis of the 2008/09
"I certainly get the impression that Kyle is a MAGA fan, which is fine (you’re free to call me a socialist who wants the government to get involved in everything — oh, wait) ---- Ben, lmao, you are certainly not dumb as a rock and even more importantly you have two white kids - you becoming a Republican is a when, not if
Pretty sure that the stats indicate "dumb as a rock" => republican. But nice try!
lmaooo
Government has no moral responsibility to bailout any private business. Maybe if that business threatens the overall economy which begs the question how we allowed that to happen.
The failure of Spirit wouldn't be a blip on the national economic scheme. Consumers are not owed a product or service at a price that's less than the cost to deliver that product or service.
I have to wonder Spirit pared down to something like 70...
Government has no moral responsibility to bailout any private business. Maybe if that business threatens the overall economy which begs the question how we allowed that to happen.
The failure of Spirit wouldn't be a blip on the national economic scheme. Consumers are not owed a product or service at a price that's less than the cost to deliver that product or service.
I have to wonder Spirit pared down to something like 70 aircraft and they still couldn't raise ticket prices to the point of covering costs? A very good indicator that your product sucks.
George, why didn’t we hold any actual big players accountable after 2008? (No, not a random trader, I mean the ones with the deep pockets and actual power.) Because, that lack of accountability has lead to this breakdown, loss of trust, and rampant corruption we’re witnessing today. Perhaps, the Occupy folks were onto something…
IDK maybe you should ask your saint, Obama. He's the one that lied to Americans. To the point that I doubt he was born in the US. He's a total fake.
Obama's looking pretty good these days. Also, yes, Hawaii is now part of the US. (It's been a state since 1959, ya old-timer! They had to update the flag, remember?)
This liberal blogger is showing his bias (again).
Trump is literally attempting to prevent a monopoly- which benefits all consumers.
Spirit will keep American, Delta and United in check by influencing their basic economy fares to compete.
Job protection. ‘Nuff said there.
Spirit serves numerous regional airports allowing the traveling public access to air services they would otherwise not have. Shutting them down would absolutely leave the public to fewer options and raise airfares.
I’m...
This liberal blogger is showing his bias (again).
Trump is literally attempting to prevent a monopoly- which benefits all consumers.
Spirit will keep American, Delta and United in check by influencing their basic economy fares to compete.
Job protection. ‘Nuff said there.
Spirit serves numerous regional airports allowing the traveling public access to air services they would otherwise not have. Shutting them down would absolutely leave the public to fewer options and raise airfares.
I’m sure this liberal blogger was cheering when Obama handed over 12 billion dollars to Chrysler.
Maybe this liberal blogger should take a course in economics
@ Mel -- Could you help me understand how this is an attempt to prevent a monopoly, specifically? And could you tell me which regional airports Spirit exclusively offers service to?
@ Ben Latrobe Pennsylvania is a place I have drooped off neighbors. Middle income folks with 2nd homes. With free parking and no need for luggage, sports gear they have been taking advantage of unnecessary low fares for years. If I have noticed this I fault Spirit for ignoring how you turn your business model around.
Preventing a monopoly?
OK. I'll bite - which American carrier will control 100% of domestic air travel if the U.S. government fails to bail out Spirit?
Sun Country Airlines!
Dude. Speak English here and make complete sentences, please. Thanks.
Mel will never return to defend this position. That’s how these people are. Large on the internet, small in real life.
It's wild to hear someone accuse someone of being liberal because they want the free market to let a business fail.
Let’s be honest. If any other administration, D or R, had done this, some people would be screaming communism.
And, still, it would not be communism, unless they violently nationalized the entire industry.
And many of those who scream 'communism' (either in favor of or against it) don't even know what it actually is.
hbilbao, yeah, umm, a lot of things are ‘in-name-only,’ like, the DPRK is the ‘Democratic People’s Republic of Korea,’ but it is most certainly not ‘democratic,’ unless you consider the only possible ‘vote’ is for Dear Leader is legitimate… it’s a totalitarian dynastic dictatorship.