Yesterday, I covered how Spirit Airlines issued a dire warning about its financial situation in a regulatory filing, stating that there’s “substantial doubt” about the carrier’s ability to keep operating over the next 12 months. The carrier’s current credit card processor agreement expires at the end of 2025, and more collateral is being required, given the company’s finances.
Along those lines, the company’s CEO has sent an interesting memo to employees, trying to paint a very different picture of the company’s reality.
CEO says Spirit Airlines isn’t going anywhere!
Following the amount of attention that Spirit has received for its regulatory filing, CEO Dave Davis has sent out a memo to employees, essentially downplaying the risks the company faces.
He emphasizes that the statement in the company’s filing was simply required by outside auditors, but states that the risk is only there if the company doesn’t make changes… but the company is making changes! Here’s his memo, as shared by krisvancleave, which I find to be quite interesting:
Yesterday, we filed our 10-Q, outlining our second quarter 2025 financial results. This filing generated media coverage and, naturally, a lot of questions.
Let me start by providing some context around what’s included in the report. The report uses the phrase “substantial doubt about the Company’s ability to continue as a going concern.” This is a phrase required by our outside auditors to convey that there is risk if we do not make changes. But, we are.
Since my arrival at the airline, the Senior Leadership Team and I have developed a plan that leans into Spirit’s strengths, while moving away from the elements of the business that no longer work. That includes strategically growing our network in stronger markets with more opportunities and making some difficult decisions like re-evaluating unprofitable routes. It also includes improvements to our revenue management system and the way we sell our products. By doing so, the team and I are confident that we can build a Spirit that will continue to provide consumers the unmatched value that they have come to expect for many years to come.
Spirit is a critical part of the U.S. aviation industry. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. We remain hard at work on many initiatives to protect our unique franchise, our valued Team Members, our business partners and our Guests who place their trust in us every day.
What can we make of these Spirit Airlines comments?
The first thing worth calling out is that Dave Davis is a very bright guy, and he only joined Spirit in April 2025, after years at Sun Country. He has only been in his role for several months, and I trust that he’s doing everything he can to improve things. However, I’d argue that there’s only so much that can be done to save a sinking ship.
Nowadays quite a few airlines are struggling, so we hear what various management teams suggest as their plan to turn things around. Here we see Davis basically saying “hey, there’s only a problem if we don’t change things, and we are changing things.” And then you see that the things that they’re changing include *checks notes* “growing in stronger markets” and “re-evaluating unprofitable routes.”
We constantly hear airline executives say that, but it’s such a funny quote to me, as if that’s an actual turnaround plan. The reality is simple — ultra low cost carriers have been squeezed out of so many markets, and it’s incredibly difficult for them to find routes where they can break even, let alone be profitable.
That reflects the overall industry shift we’re seeing, whereby even the profitable airlines aren’t making much money flying, but instead, flying is essentially a loss leader for the frequent flyer program.
The issue is, looking at Spirit’s financials, the situation is still really, really bad. In Q2 2025 (historically one of the strongest quarters), Spirit reported a net loss of $245 million, on just $1 billion in revenue. That’s an even bigger loss than during the same quarter the previous year.
Now, some things are actually improving, compared to the same quarter last year — the carrier’s total revenue per passenger was up 7%, and the company’s total revenue per available seat mile was up 10%. But this was only possible through shrinking massively (a roughly 25% capacity reduction), and that also comes with increased costs, since being low cost relies on growth.
Bottom line
Spirit Airlines CEO Dave Davis is downplaying the company’s regulatory filing regarding “substantial doubt” about being able to continue to operate. He claims there’s only risk if the airline doesn’t make changes, but claims the company is making changes.
That strategy seems to largely be about cutting unprofitable routes and moving upmarket, but that’s easier said than done. As CEO, of course he has to encourage employees and paint a positive picture of what’s going on, but I can’t imagine he really feels that way.
What do you make of these comments from Spirit’s CEO?
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