Spirit Airlines is planning to furlough 260 pilots starting in September. They’re blaming Pratt & Whitney engine issues, which limit their flying. However, they’re also deferring delivery of new aircraft because of their financial position. And they wouldn’t be in this position, except for the federal government blocking plans which would have utilized these resources.
- These furloughs, then, are the direct result of the Department of Justice blocking JetBlue from acquiring Spirit
- JetBlue wanted Spirit for its pilots and planes
- And JetBlue needed to grow primarily because of its partnership with American Airlines, which the DOJ also blocked.
All aircraft Spirit has on order for delivery between the second quarter 2025 through end of 2026 will be pushed back to 2030 and 2031. This also means slower growth in the ultra low cost carrier segment, the exact thing that the DOJ claimed their action against JetBlue-Spirit was aimed to prevent.
Spirit will take one aircraft on direct lease in each of the second and third quarters of 2025, and has not yet paused delivery of aircraft ordered for 2027 – 2029.
In fact, at the same time as engine issues on its fleet are flagged, so too is the airline’s need to “reset the business and focus on the core airline while we adjust to changes in the competitive environment.” They are choosing not to grow and don’t need as many pilots as are currently on property. They’ve already suspended hiring.
Spirit had planned to take delivery of 20 new Airbus A321neo aircraft this year, and grow by a net 19 planes next year after retirement of its remaining Airbus A319ceos as well as 6 Airbus A320s.
Not only is Spirit receiving compensation from Pratt & Whitney for engine issues, as Airbus has tried to put together an order with United for new planes (presumably once United gets out from under FAA-imposed restrictions on growth), there’s been talk of paying for delivery slots held by other airlines. Spirit may be receiving compensation for these deferrals, building additional cash.
Enilria observes that if Pratt & Whitney can solve its engine issues quickly, that would mean a rapid return to service of Spirit’s grounded fleet — too rapid, it seems, for Spirit’s growth appetite.
Other carriers, like United and JetBlue, have offered voluntary programs (not furloughs) to manage workforce, driven in part by Boeing aircraft delivery delays.
So…The DoJ is to blame for Spirit’s myopic reliance on a merger that had a good chance of failing. They put the cart before the horse on this one…not the DoJ. This article should be labeled as an opinion piece.
@Adam – your argument is circular – the DOJ isn’t to blame for stopping the merger, because there was a good chance that the DOJ would have succeeded in stopping it?
Spirit- JetBlue was going to be a classic resource consumption and competitor killing merger. The overlap in the NE and FL were clearly never going to pass muster, which many said at the time B6’s leadership announced their half-cocked attempt. The U.S.’s antitrust laws have been on the books for over a century, it’s not the government’s fault that JetBlue under Hayes was foolish enough to attempt something so misguided, nor is it the government’s fault that Spirit chose to put all of their eggs in the basket of P&W, who has had a less than stellar track record with commercial turbofan reliability the last several decades.
Low cost = unhealthy .
High cost = unfair .
Medium cost = Cunard across the pond . Includes good health and everything fair .
You’re very defensive about your perspective of this. Spirit was dependent on someone to “save” them, and the merger was blocked. Usually, when a merger gets blocked, or is suggest that it will be blocked the company wishing to perform the acquisition regroups and investigates how to give concessions for the deal to go through. Unfortunately, in this case, Spirit had lost so much value since the beginning of the attempted acquisition, that JetBlue had no course forward. They were going to overpay for an airline who was alone as the only unprofitable one in America since Covid. They knew that there was no way this would work out especially with concessions, and decided not to pursue it. The government assessment was, and is correct for what the result of the full merger would have been, but really, JetBlue knows the government saved them from a massive losing acquisition. If they did not know that to be true, they would’ve continued to pursue it. Thats the reality. Many companies have previously been blocked and negotiated their way into the merger, if they really saw it as beneficial. Look at what AT&t went through to acquire Time Warner, even when the president at that time had a personal vendetta against it.
I wonder if Spirit will start growing again if there is regime change next January. At least they made some money on the failed attempt to merge with JetBlue. I suppose that the merger could be back on next year. I think that the business models followed by the ULCCs will ultimately fail or have to be substantially altered.
As a pilot for another major airline, I did find the DOJ’s reasoning for blocking the merger to be curious. “ We are blocking this merger because the consumer will end up paying higher prices for airline travel”. So when Spirit files for Ch. 11 ( and possibly Ch 7 ) the consumer ends up paying higher prices for airline travel as they attempt to shrink to profitability. Duh
Now, Spirit says we are deferring deliveries and cutting costs ( including 260 pilot furloughs… at the end of the year?) so they can add $340 mil to the coffers plus another $150-200 mil from Pratt for the engine issues. Let’s face it the big 3 figured out how to compete with the ULCC’s and Spirit’s cost structure is way, way unsustainable. So, a handful of pilot furloughs is a drop in the bucket, and this is posturing for labor concessions and another merger attempt before a dip in the economy forces them to liquidate. But, what do I know. The airline business is cut throat.
How many Boeing aircraft does JetBlue have? What is driving JetBlue’s voluntary workforce management programs?
“Other carriers, like United and JetBlue, have offered voluntary programs (not furloughs) to manage workforce, driven in part by Boeing aircraft delivery delays.”
NK specifically said the layoffs and aircraft deferrals are due to cash flow because of the Pratt and Whitney Geared Turbofan issue which is causing significant aircraft groundings for which NK is being compensated.
Why stick w/ facts when you can create your own narrative?
I hate to say it, but there’s no evidence that a combined Spirit+JetBlue would be in a better position right now.
Both airlines are currently circling the drain.
Jetblue was thought to be in a much better position when the buyout was announcd, yet they have zero direction right now. Their planes are the most delayed in US, their staff (which used to be their best asset) is now terrible and their hard product still includes 20 year old A320s with tvs that havent worked in months. It’s awful for all travelers for Jetblue to circle the drain.
I agree with Adam. Not sure what Gary’s issue is. JetBlue was pretty transparent about their intentions. The merger was getting them some pilots/planes, while eliminating a competitor. In my opinion, the merger made both airlines lazy. It wasn’t that long ago, where Spirit was one of the most profitable airlines in the industry. I know lots has changed since then, but I do believe they have a place in the marketplace. I can see them merging with Frontier in the future, but at a fair price (not the inflated JB offer).
@Jimmy – ascribing the ‘transparent intention’ to JetBlue of ‘eliminating a competitor’ is unfair and inaccurate. You may believe that was your intention, but suggesting it’s what they were ‘transparent’ about is simply false.
Does Gary work for A4A? He hates labor and loves simping for these billion dollar companies. We should have never let the industry get this consolidated.
@Tim Dunn – they said BOTH P&W *and* that they need a strategy reset, and are intentionally slowing growth. Those things run counter to the narrative of blaming P&W, because the engine problems are slowing growth which they say they need to do and are pulling other levers to do even more.
The only way to square these disparate parts of the narrative is to suggest that the P&W engine problems get *resolved* next year, so P&W gave them a slowing growth trajectory but they’ll need something *else* to take its place (deferred orders).
Thanks DOJ
NOW 260 young futures and families down the drain.
I guess the Big 3 is smiling right now
As someone in the industry I buy tickets often when I need to be somewhere instead of relying on NRSA. I looked at a Spirit ticket yesterday for an upcoming trip ORD to LGA. The $39 dollar fare was indeed cheaper than UA or JB $59. What blew me away was Spirit wanting $72 for carry on or checked bags. $79 for all seat assignments except the Big Seats which were $154. Absolutely insane.
Much like racial minorities who vote democrat any worker who makes a salary or wage who votes for the democrat party is voting against their own best interests.
Democrats want to make everyone slaves which is par for the course since they are the party of slave owners and slavers.
In addition to the PW fiasco, their business model is under increased pressure. The legacy carriers have segmented out basic economy fares to better compete and deployed more capacity to leisure in the wake of COVID, and many carriers today depend on credit card partnerships as a revenue stream which Spirit doesn’t offer a strong offering in. Their brand is also the butt of countless jokes for anyone under 40 and gives near constant fodder for TikTok and Instagram schticks, the poor perception of their brand has become embedded into popular culture. This is why see them on sort of a vulture foraging strategy now, when they’re trying to disrupt in markets where they’ve had less exposure like PDX and SJC where the promise of fare disruption in captive AS and WN markets can outweigh less preconceptions about their brand.
It’s not the DOJs job to make sure Spirit makes money. That’s up to spirit. They’re not there to save jobs, they’re there to make sure the customer doesn’t get forced to pay more.
@Jimbojim-
How will the customers not be forced to pay more if Spirit is forced to liquidate?
There will be NO option for ultra-low fares and price increases would possibly be considered by low cost carriers.
The merger was about more than costs to consumers.
Jetblue wanted the workforce, the equipment and the Gates.
Jetblue initiated the merger and at the end of the day had the nerve to reference the last 3 years of fighting for it to happen as ” a distraction”. Jetblue is also scrambling at the moment so maybe Spirit will have the better strategy in the end. We will have to see what develops.
As usual, the central issue with this situation is completely lost on 90% of the population. Why do people accept the premise that governments should have the right to tell private businesses how to organize their affairs?
@James N… I’ll bite. Private businesses have proven time and time again that they cannot be trusted when it comes to protecting consumers. In a business with high barriers of entry (like airlines) it’s even more critical to protect fair competition. Based on your comment, I guess you are ok with collusion as well (since it’s private business organizing their affairs) SMH!
Just curious, were you making the same claim when airlines were looking to get bailed out by the government?
@JamesN Right! We need to go back to the good old days when private businesses could put arsenic in your paint, force children into workhouses, collude and price scheme, sell food without telling you what’s in it, and defraud and rob investors at will! Dang those pesky higher ordered mammals that have the idea that societies should have an organized system of protecting general public interest!
@Seatac – JetBlue wasn’t merging with NKS to simply eliminate a competitor. Sure it was an outcome, but they simply cannot achieve scale without a merger. There aren’t airplanes, crews, or airport infrastructure to support it without an acquisition.
You seem – as are most Americans – to care about their own pockets rather than growing good paying jobs and trying to create another competitor to the Big 4.
But hey – good for you. And good for the greyhound crowd. They can go to Vegas for $39, plus $99 for a carryon! Yay consumer.
First of all they had to furlough due to the engine issues with Airbus, not because of the failed merger. The pilots being furloughed will easily find another good flying job until recalled, actually it would be a great opportunity to make more money for the time being with the bonuses at the regionals. This has been a trend in the airlines since their inception, it happens that’s why people stress so much how important seniority is. Lastly, the point of the merger was not to be “bailed out”. Spirit was on a rocket ship before the engine issues and they had planned to merge with Frontier about a year earlier. Consumers should be thankful the merger did not go through. Look at the big 3, all they want to do is grow and be the biggest, but prices go up and service goes down.
Spirit sucks and should be allowed to die. The flight attendants “might” be able to get a job at AA after they come to their senses and lock out the union or fire the underperforming W.A.R. crowd.
The pilots whose sole goal is to bleed these companies dry via outlandish pay demands at the expense of the other work groups: drop deap. Enjoy your $200/wk. unemployment.
@ kitwtt- Because that is after the fact. If spirit was allowed to merge it would have created an even more unfair environment. Again, it’s up to the business to make their money, it’s not up to the government. They are there to aid, not ensure their income. At the end of the day, people don’t like flying on spirit, maybe this is a good way for them to offer better experiences.
This is a much lower number than the amount of employees (NOT covered by a union contract) that would have been fired had the company been eliminated through JetBlue. Nearly ALL employees would have been gone. Definitely not negating the pilots being out, but this is not due to DoJ. The bloodbath would have been substantially worse if the DoJ allowed spirit to be killed by JetBlue.
NOTE:
– NK was bleeding money before B6 came into the picture. A merger with F9 was no better.
– Most legacy carriers have mimicked the “ULCC” model with their own bare fares stealing PAX
– NK has a huge block of debt due 2025 based on prior management decisions
– IIRC, NK gave its pilots a block of money via pay raises due to COVID
– NK’s only free cash flow is non-conventional (break up fees with B6; P&W engine offsets; sale & leaseback of a block of jets; etc).
– NK is not earning enough conventional revenue to break even.
– NK laying all the blame on DOJ is a joke! The root cause of the problems started several years ago!!
– Best for these yahoos to pray for The Donald to win, declare Chapter 11, and have another airline picks up the pieces. If Sleepy Joe wins, it’s Chapter 7 and all is lost!
Conjecture by the author.whom
I normally agree with; you chose to cite the failed merger with B6 as the cause of furlough. In point of fact had B6 stayed clear of the Spirit/Frontier merger there would be no furlough at all.
B6, without a dance partner (being NYC based) was/is in survival mode and Spirit fell for it.
The Judge was correct in his assessment, the flying public needs a larger Spirit NOT a larger jetblue.
Or it could have been just plain old bad MANAGEMENT who misjudged what the consequences of over-expansion.
I have seen this time and time again in the 40+ years I have been working in the airline industry.
It is an age old story and those that do not know history are doomed to repeat it.
” they wouldn’t be in this position, except for the federal government blocking plans which would have utilized these resources”
I guess the author is angry that he lost is job [disgusting insult redacted -gl]. It has left him with a distorted view of reality. If anyone is to blame, it is Jet Blue. They were told several times, by Spirit Management, when they made their inital offers that they didn’t think the DOJ would approve the merger.
The DOJ also told them they wouldn’t approve the merger. They went forward anyway and made a way above market value offer so they could undermine Spirit’s managment and get their shareholders to approve the deal over management’s objection.
NowJet Blue and Spirit are circling the drain because of Jet Blue’s poor managment decisions. Jet Blue was dying because they no longer offer a competitive product. They should have came up with a new business model rather than trying to force consumers to buy a non-competitive product by taking away their options.
Perfect, both Jimmy and seatac315 prove my original point. I love when that happens.
Good god stop sucking up to big business. More merges is the LAST thing the country/industry needs
Gary,
“restrategizing” hardly means that they need to regroup after the DOJ’s actions.
They needed to regroup because, as your astute readers noted, NK’s business strategies weren’t profitable long before B6 came on the scene.
And as also has been noted, NK didn’t want a merger with B6 but B6 persisted and screwed EVERYTHING up.
NK can extricate itself from this mess.
The question is whether B6 can.
the big 4 benefit not because of the DOJ but because B6 has led the industry in stupid strategies.
Yep. All big guvmints fault. How dare they not allow less competition.
I disagree with your assessment. First there has been too much consolidation in the airline industry. Competition is healthy. If they can’t compete, they will go out of business and another airline will start up and fill in the void left.
Second, you stated: “JetBlue wanted Spirit for its pilots and planes.”
Then stated: “And JetBlue needed to grow primarily because of its partnership with American Airlines, which the DOJ also blocked. Growth through Aquisition isn’t growth at all. It is taking competition out of the marketplace. And as you stated, JetBlue needed to grow because of a business deal that was blocked, so they didn’t need the aircraft Afterall.
Each Airline needs to figure out how to grow on their own. If that means they are just a regional airline, so be it. Spirit’s model is obviously failing, and JetBlue isn’t doing so well. Neither airline is very old. Let it be the survival of the fittest. I see a lot of passengers getting on Spirit. If they aren’t making money, it’s because their business model is failing.
This statement makes zero sense: “All aircraft Spirit has on order for delivery between the second quarter 2025 through end of 2026 will be pushed back to 2030 and 2031. This also means slower growth in the ultra-low-cost carrier segment, the exact thing that the DOJ claimed their action against JetBlue-Spirit was aimed to prevent.”
If JetBlue had bought Spirit, there would be one less ultra-low cost Carrier. Slower growth is better than not existing. Did you even think about that statement?
What JetBlue was trying to do was become a major player in the industry through the acquisition of Spirit. They wanted to compete with the big 4 airlines that dominate the market. It’s very difficult to grow organically to the scale needed to challenge them. With only 2 manufacturers of aircraft, that have an order book years into the future and difficulty obtaining gate space at airports. It has to be through a merger, which is how the big 4 airlines became so dominant and was allowed by the government to do so. JetBlue wanted the planes and gate slots of Spirit to better compete. But, the government under Biden has changed the playing field picking winners and losers. The big 4 don’t need to worry about another viable competitor now. The consumer doesn’t benefit from a weak JetBlue or weak Spirit. If the government was so concerned about the consumer, it should never have let the big 4 become what they are. Now the legacy’s are eating the ULCC airlines by matching fares and offering a better product. Spirit has been trying to sell the company for several years. Now they are in a hole with engine issues and lowered demand for their product. The government’s position has made the path forward for Spirit difficult as many feel their business model has run its course and needs to change. How this will benefit the consumer is yet to be determined. Will the government prop up Spirit, if needed, to help the consumer, or will it let Spirit fail?
@ Piper JetBlue would have barely been the number 5 carrier with the merger and still heavily regional on the east coast, it would not have suddenly been some heavyweight against the Big 3 + WN. They wanted Spirit to consume its resources and eliminate a competitor in FL and the NE, which is inherently anticompetitive. The application of antitrust law isn’t dependent on “well DL was allowed to do it 16 years ago so you need to let me now,” it’s based on an evaluation of the market and the competitive landscape at the time of the proposed merger. When the late aughts merger round kicked off with DL and NW, there were still eight legacy network carriers plus WN, FL, B6, F9, YX, NK, and nascent VX, G4, and Skybus. That simply isn’t the case today, the idea that B6 could acquire NK for parts with so much network overlap in the current market was foolhardy from its inception which NK’s own management along with many legal and wall street analysts said when it was announced. Had they simply wanted an acquisition for scale to accelerate growth, they would have had a better chance making a try for F9, G4, SY, or AS if they wanted to try something really bold to build a true network carrier (although AS would have come with a hefty price tag probably beyond their B6’s capability).
So Spirit is in this situation thru no fault of their own? Why were they looking for a merger to begin with? No, let’s not take any responsibility and blame others. The government is a convenient and easy target. After all we blame all our ills on DC. A market with over 300 million population and so few airlines. Competition, hmm?
In reply to Andy S. who alleges “Democrats want to make everyone slaves which is par for the course since they are the party of slave owners and slavers.”
You are off subject here, are you being subsidized by the Ruskies, Andy?
JetBlue wanted Spirits planes, future Airbus deliveries and gates. Spirit has a much lager footprint out West than JetBlue, LAX being one of the markets JetBlue wanted to scale larger out of terminal 5. Along with Las Vegas. They recognize they were to focused on the East Coast. Spirit had fleet commonality with JetBlue. Some of those future Airbus orders were going to be converted to wide body aircraft. A combined JetBlue Spirit would have been 8000 pilots. Another acquisition down the road, along with future aircraft deliveries, they would have been a solid competitor to the big 4. JetBlue was trying to stay relevant and become a major player instead of watching a Frontier Spirit merger. The terms of the merger with Spirit, if it failed, would be JetBlue giving Spirit roughly a half billion dollars. That’s a lot of money to gamble on a failed merger if all they wanted to do was take out a competitor don’t you think. JetBlue gave up the NorthEast alliance with American. They were giving up slots in LaGuardia and some other cities to Frontier to push this through. JetBlue tried to acquire Virgin America but Alaska grabbed them. Face it, this country eventually will be served by a small number of massive airlines. Alaska Hawaiin will scale larger. Southwest is possibly looking to acquire another airline that operates Airbus, as being tied solely to Boeing is now hurting them. Spirit has just negotiated with Airbus to push future deliveries down the road. Instead those Airbus deliveries will now go to whom (United is looking for aircraft with the Boeing issues). Could the Biden administration blocking the merger help United to cut in line for those Airbus deliveries. Ironic that looking to keep competition within the industry will help one of the big 4 become even larger.
Part of what is being missed is the merger would have left a lot of consumers with no option. If you fly out of a smaller market often your only viable choice is Spirit, Frontier or Allegiant.
I suspect this is the big reason the merger was a non-starter from the DOJ’s prospective.
I love how some here act as if JetBlue is “entitled” to compete with the big 4. Perhaps, they need to shrink in order to become profitable and survive in the long run. This obsession with constant growth and market share is what gets airlines in trouble in the first place. They knowingly lower fares and operate non-profitable routes for the sake of gaining market share, pushing out a competitor, etc. Then, they blame the consumer for the race to the bottom. Convenient, especially when it’s the airlines that set the pricing! What are the legacy airlines scared of if ULCCs have terrible service, passengers that most legacy carriers don’t want, routes to secondary airports, etc.? In my opinion, there’s enough room for all airlines and different models to succeed. Greed is the source of the problem, and nobody wants to take accountability for their actions (microcosm of society in today’s world).
Still waiting for the Big 4 to be broken up like Ma Bell in the 80s since the DOJ ruling on B6/NK. After all, if a 9% market share would’ve been uncompetitive & therefore illegal, 80% surely is.
As a pilot of Spirit I will not be voting for Biden in the next election. They have no sense what freedom is and how to defend it. They claim democracy over the republic. Protecting freedom means limiting government ability to use socialism so you can have a 20$ airplane ticket so Joey can get home for Christmas. Too bad Joey will not be able to find that 20$ airline. That what happens when people like Biden want a vote and don’t care about the repercussions of reality.
You misspelled unsustainable business model. That’s how you end up $1B in the red, not because the DOJ wouldn’t let you merge. And whatever they own depreciates daily while the intrest on the loans grow. Further in the redd every day…
Compared to any other large, national industry, there is PLENTY of competition in the US airline industry. It is obviously a business that benefits from scale — both for the customers, and for consumers. Sure, there will always be a few cases where an airline dominates an airport so much that fares rise, but that airport also always benefits from fantastic flight frequency — and soon draws competitors seeking a piece of the action.
There is absolutely zero reason to believe that the government micro-managing competition in the airline industry will do a better job for consumers than simple, free enterprise will. The Spirit-Jetblue-American fiasco is, of course, a classic case. There is zero reason to believe that any of the government’s actions have HELPED competition. To the contrary. What is particularly concerning now is the obvious fact that the low cost carrier business model is failing in America. Those airlines are going to need to change their business models to survive — mostly likely by merging. We obviously need the gov’t to step back and let the market work. It almost certainly would be better than the alternatives for the companies, their employees and customers.
@Captain Alexander Wilson Let me get this straight… It’s Biden’s socialist agenda that has forced ULCCs like Spirit to charge $20 fares? Riiiiight! If you don’t like working for Spirit, then leave. Isn’t there a shortage of pilot jobs? Oh wait, now you’ll cry about having to start at the bottom of the tenured list at another carrier. I am anti-union myself, but I will go out on a limb and conclude you love your ALPA perks. Be careful, you might be viewed as a communist.
Not allowing the JB/Spirit merger to go through IS letting the market decide. If they both go belly up, then so be it. Allowing them to merge was an artificial way to prop up lazy management from both companies.