Spirit Airlines will exit bankruptcy and be taken private by creditors, led by Ken Griffin, PIMCO, and a subsidiary of Franklin Templeton that includes former pieces of Lehman Brothers and Rothschild Asset Management.
The airline’s stock will be wiped out, $795 million in debt will be reduced, and the new owners will inject $350 million into the carrier. That won’t last long.
Frontier had continued to try to acquire Spirit and had a plan to turn the combined entity around. It’s not clear that Spirit’s new ownership does, based on materials disclosed through the bankruptcy process.
Spirit lost $643.8 million in the first 9 months of 2024. Their operating margin for the third quarter was -27%. Not paying interest on $800 million in debt helps, but not enough.
The airline still faces Pratt & Whitney engine problems, requiring the grounding of aircraft. They’re squeezed by shifting consumer preferences (willingness to pay more for more premium product), higher costs (labor and airport costs), and major carrier willingness to match them on price.
Meanwhile, their best exit plan – selling to JetBlue – was blocked by the Biden administration. Now shareholders get nothing, and it’s not clear how Spirit avoids a return to the courthouse. The carrier represents about 5% of U.S. airline capacity and is the only airline offering flights out of Latrobe, Pennsylvania, and Atlantic City, New Jersey.
It doesn’t seem like the airline has fixed the fundamental problem-costs exceed revenue. Maybe the move away from the ULCC business model will bring in more income, who knows? Could also be a ploy to start a bidding war among two or more airlines. Management will likely be taken care of financially to the point of never needing to work again.
Thanks alot Obama.
American does have scheduled “flight” service out of ACY via bus through PHL. It is actually pretty nice. I have used it a few times. You do security screening at ACY and they put a seal on the bus door after everyone is on. At PHL, they drop you airside in the F terminal and you are treated like any other connecting AA passenger.
I used to find these itineraries a lot cheaper using miles rather than departing PHL, but I do not see that as much nowadays. They have three buses a day.
I mean if they treated their customers better they would’ve stuck around for them, I don’t see that at all anymore they get the worst news reports about them as an airline. Never flown them and I have always paid more to not fly them.
If they had sold to Jetblue, it would probably have sunk both airlines
I already experience I have had on Spirit or Frontier has been a positive one, a few bad apples in the news media isn’t representative of the operation. I’ve always been treated very nicely by the crews on both, and had a good experience. The only time I ever have been blatantly disrespected by a flight attendant was on United (miserable late middle-aged man hater) and on American (same deal). They seem to continually screw over the bottom of their respective seniority lists also.
Have we learned nothing? Unlimited growth is the definition of cancer.
I expect nothing good will come of this for Spirit’s crews or its customers. Investors might profit, unless they become creditors. Lawyers get paid. Woohoo.
@Joseph — I blame the tan suit. And the dijon mustard. And the mom jeans. That ‘literally’ ruined our country. /s
@tom
So true…JetBlue was in no shape to hand the debt load and the integration on a timely basis. Today, I would image B6 is hoping for a Chapter 7 to pick up NEO jets and a few key slots. Also, Chapter 7 would relieve some the competition in Florida.