|
Originally Posted by havoste
(Post 4024296)
All those articles are a result of the original Bloomberg article's 'insider source familiar with the matter'.
I wonder if that insider source also pitched a United and American merger earlier this week? Seems like speculative articles like this come out right when Spirit's facing crunch time. Last time was when continued DIP funding was in doubt, articles came out saying other airlines were expecting a shutdown and getting ready to increase capacity. Citibank also said Spirit is already in default under parts of its credit agreement and may need to repay more than $35 million or pledge additional collateral. It warned that confirming the current plan could lead to almost immediate liquidation, in part because lenders would have the right to repossess aircraft engines and spare parts pledged as collateral. |
I read the Citibank filing. The situation is dire and they are out of compliance with the revolver. The plan calls for further shafting of the revolver lenders, which due to the structure of the revolver supersedes bankruptcy proceedings. They can call the entirety of the revolver and seize the collateral (engines parts and slots) at any time, which may be the death knell.
The deadline to object to Spirits plan has been extended, which is also alarming. And several filings, including by the US Govt. trustee, have pointed out substantial deficiencies in the reorganization plan, disclosure statement, and the circumspect timing of Spirits filings |
Originally Posted by jdt30
(Post 4024089)
"That's what I hate about new hires, man. I get older, they stay the same age"
|
Originally Posted by Jdub2
(Post 4024356)
I read the Citibank filing. The situation is dire and they are out of compliance with the revolver. The plan calls for further shafting of the revolver lenders, which due to the structure of the revolver supersedes bankruptcy proceedings. They can call the entirety of the revolver and seize the collateral (engines parts and slots) at any time, which may be the death knell.
The deadline to object to Spirits plan has been extended, which is also alarming. And several filings, including by the US Govt. trustee, have pointed out substantial deficiencies in the reorganization plan, disclosure statement, and the circumspect timing of Spirits filings Guessing the P&W thing really is what killed them, and then combined with the jetBlue merger getting called off. Then throw in the post-Covid inflation adjustment for wages where the bottom tiered workers handling bags etc at Spirit were making wages much closer to mainline wages. Terrible sequence of events. Had you told me 10 years ago Spirit would be on the verge of liquidating I would've laughed. |
Originally Posted by Name User
(Post 4024360)
Guessing the P&W thing really is what killed them.
That formula also sets rules for valuing collateral. For instance, engines which are “stored . . . with a low expectation of a return to service within the one year following commencement of such storage” must be valued at zero. Id. § 1.01 (definitions of “Stored,” “Appraisal”). The Defaults are serious: the Borrower failed to deliver conforming appraisals as required by Section 5.07 of the Credit Agreement—among other things, the March 2026 Appraisals improperly reflect the post-shop visit value of an in-shop engine, rather than its maintenance condition as of the measurement date, and fail to assign a value of zero to three Stored engines as the Credit Agreement requires. |
Originally Posted by Jdub2
(Post 4024362)
Incidentally that specter is still haunting them. Part of the collateral non compliance is how they value engines:
Three engines must be valued at zero but are currently being represented at market rate for an operating engine. |
Originally Posted by Name User
(Post 4024360)
In the 2010's I sat in on every earnings call they had. Every quarter, YOY growth, and CASM-ex decreasing. 10%-15% margins. Every new market they entered, they generated new traffic, upwards of 30%, from a completely new customer base that the airlines at that time didn't serve (ie Greyhound riders). Doug Parker referred to them as "our Spirit problem". They were coming for AA and I assume factored into his directives in cheapening the airline in an attempt to lower costs to better compete with what he saw as their next competitor.
Guessing the P&W thing really is what killed them, and then combined with the jetBlue merger getting called off. Then throw in the post-Covid inflation adjustment for wages where the bottom tiered workers handling bags etc at Spirit were making wages much closer to mainline wages. Terrible sequence of events. Had you told me 10 years ago Spirit would be on the verge of liquidating I would've laughed. |
Originally Posted by Name User
(Post 4024360)
Doug Parker referred to them as "our Spirit problem". They were coming for AA and I assume factored into his directives in cheapening the airline in an attempt to lower costs to better compete with what he saw as their next competitor.
Doug Parker has a great recent discussion on Airlines Confidential about how transformative Basic Economy (and cabin segmentation in general) has been. The airlines found a way to serve price sensitive customers and simultaneously take care of their high margin customers on the same flight. When the majors can price compete with a ULCC but only for ULCC passengers ... the ULCC loses. |
Originally Posted by VacancyBid
(Post 4024411)
Basic Economy is what killed spirit
Doug Parker has a great recent discussion on Airlines Confidential about how transformative Basic Economy (and cabin segmentation in general) has been. The airlines found a way to serve price sensitive customers and simultaneously take care of their high margin customers on the same flight. When the majors can price compete with a ULCC but only for ULCC passengers ... the ULCC loses. |
Originally Posted by eglplt
(Post 4024420)
This is exactly what happened! The legacy carriers, through basic economy, took away the ULCC pricing elasticity forcing the price the ULCC could charge. Why on earth would you fly Spirit when you could buy a BE ticket on any legacy carrier and receive first and foremost, a semblance of customer service along with many other perks! I guess if you are willing to forego the fight in the back you may be exposed to other more enjoyable experiences!
AA was a huge innovator in data crunching, and had one of the very first computerized reservation systems, and was able to very effectively parse that data to manage inventory of very low fares in response. Their methods drove the low cost carriers to the brink of extinction. Not quite all the way, as People Express was bought by Continental, and UALs EWR operation is the direct descendant. The question as to why this lesson had to be re-learned by the majors is the big mystery. |
| All times are GMT -8. The time now is 12:21 PM. |
Website Copyright © 2026 MH Sub I, LLC dba Internet Brands