Spirit on the brink?
October 4, 2024
Spirit Airlines, Inc., is the largest ultra-low-cost carrier in North America, and was rated to be the seventh largest passenger carrier in North America last year. Originally founded in Michigan in 1983, as Charter One Airlines, Spirit is today headquartered in Dania Beach, Florida, and maintains crew bases at Atlanta, Chicago–O’Hare, Dallas/Fort Worth, Detroit, Fort Lauderdale, Houston–Intercontinental, Las Vegas, Miami, Newark, and Orlando. Spirit operates scheduled flights throughout the United States, the Caribbean, and Latin America, using an all-Airbus fleet.
The fleet consists of six A319-100s, 64 A320-200s, 91 A320neos, 30 A321-200s and 21 A321neos. These aircraft replaced a mix of McDonnell Douglas DC-9s and MD-80s.
There have been a number of attempted mergers – first with Frontier Airlines (rejected by Spirit shareholders in July 2022) and more recently with Jet Blue, this being defeated as a result of opposition from the U.S. Department of Justice’s Antitrust Division.
Spirit Airlines’ stock fell by almost 50%, concerns were expressed over the airlines future. Spirit denied speculation that Spirit might have to file for Chapter 11 bankruptcy protection on 18 January and said that the company had no plans to file for bankruptcy and was looking for new plans to secure its future.
Ted Christie, Spirit’s chief executive, maintained that the company was not exploring filing for Chapter 11 bankruptcy as recently as August 2024, and the airline has been making efforts to improve its offering in a bid to attract passengers and boost revenue. Despite these efforts, Spirit reported a first quarter loss of $143 million and a second-quarter loss of $193 million, a total of $336 million in the first half of 2024.
In recent months, Spirit has been forced to furlough some hundreds of pilots, and has deferred deliveries of new Airbus A320neo aircraft. Some 21 of its existing A320neos have not flown for more than 30 days, in the wake of the Pratt & Whitney’s recall of PW1100G geared turbofans (GTFs), which power the type, in the wake of ‘manufacturing issues’. Spirit is reportedly taking a monthly payment of c.$150-200 million in compensation for these groundings.
FlightGlobal reported that Spirit has “sharply reduced its October schedule and is cutting routes across its network” amid reports of a potential bankruptcy filing. It has been estimated that Spirit cut passenger capacity by about 18% between August and September, and has reduced its October schedule by about 10% compared to October 2023.
Bloomberg reported that Spirit Airlines’ efforts to restructure its debt and to thereby avoid having to file for bankruptcy had “hit a snag,” suggesting that “months of talks with bondholders” had failed to reach a deal.
The Wall Street Journal reported that Spirit was discussing a possible chapter 11 filing, though it said that the “timing of any such filing, should it happen, wouldn’t be imminent.” Despite this, the news triggered a drop in the airline’s share price on Thursday 3 October.
