Spirit Airlines could be liquidated as soon as this week, ceasing all flying and selling off assets, according to a Bloomberg report. Discussions with creditors could still change that outcome. However, this report alone makes the outcome more likely, because it makes purchases of their tickets seem even riskier than they already were. That chases away business that could have helped keep them in business. And Spirit is not denying the reports, saying only “We don’t comment on market rumors and speculation.”
I had already told you that Spirit’s bankruptcy trustee was asking the court to delay its exit, and now that’s being widely reported. What’s not well understood is that this was,
- A technical issue, easily cured, regarding the airline’s disclosure statement. And all the investors involved are sophisticated enough to make that immaterial to their decision-making.
- So it was a tactic – more important was the underlying focus on what wasn’t well enough fleshed out: why bankruptcy emergence was better than selling the airline or just liquidating?
A liquidation would potentially help JetBlue in Fort Lauderdale. It would create an opportunity for United to bid for assets there.
- They represented 27% of 2025 capacity at the airport.
- And they have access to 14 gates, 10 of which are preferential use gates.
Outside of it’s Fort Lauderdale position and aircraft, Spirit’s 22 slots at New York LaGuardia likely have the most value.
JetBlue, of course, tried to acquire Spirit Airlines and the Biden administration helped it dodge a bullet by blocking the deal on antitrust grounds. Their goal was to preserve flying Spirit’s planes under an ultra-low cost model. Even in Spirit’s turnaround plan they were shedding a majority of their aircraft.
Frontier Airlines was outbid by JetBlue in that takeover attempt, and held numerous subsequent talks with Spirit about a deal but Spirit’s board kept holding out for a higher price. That seems like a mistake, but any fire sale of Spirit assets is certainly an opportunity for Frontier.
The best avenue for most passengers if the airline were to shut down is a credit card dispute of charges.
Credit card dispute rights under the Fair Credit Billing Act must be submitted within 60 days of the first statement showing the charge, although issuers are usually willing to honor chargebacks with a longer runway. Debit card purchase protections are far more at the discretion of the bank.
Don’t proactively cancel future travel, though. If a flight does operate without a significant change, the ticket remains nonrefundable. Wait until actual cancellation.
Arriverderci!
The trustee filed its objection on April 10. On April 13, Spirit adjourned the hearing on approving its disclosure statement from April 15 to April 23. Spirit would not have done so just because it received a garden variety objection from the office of the united states trustee – those types of objections are routinely dealt with prior to or at any hearing, and could have easily been dealt with by adding language to the disclosure statement itself. A separate objection filed by the revolving lenders (Citibank as agent) regarding reinstatement of a revolving facility raised more serious concerns, albeit one that also would likely not have proved fatal to a court approving a disclosure statement.
Anyway, if the rumors are indeed true, they likely adjourned the disclosure statement hearing because the plan will fundamentally have changed to one of liquidation, not because they got objections to a disclosure statement.
Oh no! How will the poors fly?
I guess there’s always AA.
So… “it was a tactic” Mhm. (As was Kirby’s b.s. AA-merger talk.) At least Gary and the other blogs hopefully can get some ad-revenue from the hype.
@.ANAL — Undoubtedly, many of Spirit’s customers are wealthy, penny-pinchers. There is little difference, other than a massive price difference, between Spirit and WN, B6, DL, AA, AS and UA on a 45-minute flight. I will miss them.