The bondholders who provided Spirit’s bankruptcy financing had little reason to accept a federal bailout that placed the government ahead of them in priority.
- Spirit is going to continue to lose money. They have no credible plan to stop losing money.
- The assets that are left (like gates in Fort Lauderdale, gates and slots at LaGuardia, access to Newark) would wind up being used to pay back the government, rather than the creditors.
- Those who have put money into Spirit are better off liquidating assets now, to partially recover their funds, rather than later when (1) Spirit would have lost more, and (2) they’d be lower priority in any recovery.
Citadel Americas, Cyrus Capital and Ares Management can’t agree to the terms of the government bailout. Citadel countered in a way unacceptable to the government. With no bankruptcy hearing this week, it appears that talks have failed.
Spirit previously said they would run out of cash that they could access around today. Even if there’s some runway left, it is increasingly likely that they shut down. I would not bank on flying past today, though a shutdown could come at any time.
It’s not yet clear from court filings whether the debtor-in-possession lenders have formally triggered enforcement rights or filed a notice that would start liquidation. (The most recent court notice said no such enforcement notice had been delivered.) It’s also not clear whether Spirit Airlines has funds to continue operating.
While things could change in the next few hours, it seems increasingly likely that the airline ceases operations. Enilria says a midnight shutdown tonight is rumored.
The government could not have saved NK and it was foolish for anyone to have suggested otherwise. It simply provided false hope to NK employees that need to move on no matter how much no one wants to see anyone lose their job.
High fuel costs are not going away anytime soon and there will be other casualties.
a couple more percent of industry capacity will leave to the primary benefit of DL because of the DTW overlap and B6 at FLL.
This was the likely outcome and remains the correct outcome. Administration can say “they tried” and will blame the prior administration, not the investors. Now to see who buys the assets.
It’s being reported by the WSJ so it’s not some unknown gossip website. I would expect a shut down with the last flights of tonight, maybe after tomorrow’s flights if they need to get crew back to base.
Q: Did you decide against bailing out Spirit Airlines?
TRUMP: Well, I guess we’re looking at it. If we can do it, we’d do it
Q: They’re preparing to shut down this weekend
TRUMP: Well, we’re looking at it
https://x.com/atrupar/status/2050252136613593142
If you don’t understand by now that masks are generally ineffective at mitigating contagion of the China Wuhan Lab Virus, you are an idiot. Unless you are wearing an expertly-fitted N95 or better, the exercise is pointless.
A Trump promise goes unfulfilled? What? That NEVER happens.
Oil prices will go back down. No harm, no foul. Oh, wait…
Gary, 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)
Good. Bailing out lousy money-losing businesses with my money taken by force is not a legitimate function of government. And failure is an absolutely essential component of capitalism to keep everyone, including the consumer, on his toes.
It was wrong when Carter did it with Chrysler, S&Ls with Reagan and GHW Bush, LTCM with Clinton (though that was less egregious with taxpayer money), TARP with GW Bush and Obama, and the COVID stuff with Trump and Biden (where we are STILL uncovering gigantic scams). God only knows how much money has been pissed away over the years on this godawful cr@p.
@Andrew: An asset buyer(s) will purchase Free Spirit, airport gates, planes, etc. Most willing Spirit employees will find other aviation jobs and maintenance crews for all airlines will be happy for the certified employee influx. I will miss your lower fares…
Conversion ratio is likely 1:1, 5:4 at worst.
The conspiracy theorist in me is thinking:
1. Trump is quite familiar with bankruptcies.
2. He doesn’t want the hostile media to run stories about how he did nothing and “allowed” a major employer to go under.
3. He therefore proposed the bailout package knowing full well credits would reject. He then says “oh sh*t folks I tried.”
@Andrew – Spirit’s only non-air partner is magazines for miles and it looks like even that has pulled magazine inventory
The administration could have saved them. But hey, Spirit is based in Florida. So it’s likely quite a few employees voted for this outcome. We should be happy they’re getting what they voted for.
The Administration would have never been allowed to save Spirit. Even trying to half ass use the Defense Authorization Act. Spirit is not and never was critical to national security. There would have been a stay filed and that would have been that.
I have no idea how someone things voting for Trump meant they would lose their job at Spirit. They unfortunately were working for a company with a broken business model. They should have been out interviewing understanding this may well have been the outcome. If they did not, that’s on them.
I can only imagine the TDS comments that will be forthcoming.
@toomanybooks: S&L’s were NOT bailed out unless you mean depositors were paid up to the FSLIC insurance limit.
Thousands of S&L’s failed. RTC , the Resolution Trust Corporation took the assets over and sold them over a period of years.
One upside of that crisis is that institutions with a Prompt Corrective Action designation may only pay a small bump in rates over the regional rate.
In the 80’s the government was on the hook for interest accrued under the 100k insurance limit with rates in the mid teens!
@ThatOtherOtherGuy — NACHO.
Not. A. Chance. Hormuz. Opens.
*facepalm*