NK and F9 are unprofitable
 

SOURCE:

https://www.reuters.com/business/aer...it-2023-09-21/



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"Biffle last week said Frontier is facing pressure to offer "very, very low" fares to fill up its planes. Spirit has cut its profit outlook for the current quarter, citing "heightened promotional activity with steep discounting."Frontier's shares are down by half this year. Spirit shares are down 18%. In contrast, shares of United and Delta are up 20%, and American's shares have gained 5%.

The divergence in performance has sparked questions about the business model of low cost, low fares.

United Airlines CEO Scott Kirby has called the model "doomed" as he doesn't expect the constraints would go away anytime soon. Some analysts are also calling for a review.

"I don't know that the model is completely broken, but I certainly think that it needs to be rethought," said Helane Becker, airline analyst at TD Cowen."

100% agree. The ULCC model is maxed out in the USA. Only so many Americans will tolerate it and we have reached that number. This isn’t Asia, India, Europe, or South America.

A Spirit/Frontier combo trying to grow would be doomed to fail. Indigo would transfer the order book to their holding in the rest of the world and burn it to the ground.

Jetblue is the only option at this point or watch the flood gates open as rats flee the ship

Shouldn’t be a shock to anyone. More ammo for court in a few weeks. Super Low fares are great, but not sustainable.

This trend just helps NK with the merger.

Incredibly convenient timing

I am a bit confused, thread title says both the airlines are unprofitable yet both airlines appear to be profitable and Frontier has a better than 9% margin which is a good number for an airline historically.

Gross vs Net.

I hope they don’t Drop profits to Zero. Maybe they can pick up profits out of base?

Both are still profitable using either.

Spirit hasn’t been profitable since covid. They’ve had 1-2 quarters where they had a net profit, but they’re in the red overall.

another "takeaway" is the worsening of ULCC performance, and the improvement of legacy, post-COVID.

Amazing what happens when you treat people like crap and provide zero customer service or reliability.

ULCC model isn't failing, management is failing.

I think that's part of it. For the last year it's felt like our management is out to lunch and just trying to keep the wheels on long enough for the merger to be approved and JB management to takeover. Then Ted can go start his country music career in Nashville and Bendo can.......do whatever it is Bendo does.

collecting stamps.

what management. ever since I got to NK there was a feeling that it was just a fly by night OP that seemed to get a bit lucky.

Ted and those clowns are still gonna make MINT off of this merger or no merger either way. Unfortunately the little guy gets the shaft

For sure they are checked out but...

The big 4 have been working for years now in terms of buying up gates and securing massive aircraft orders to stop anyone else from growing. Just look at DFW. AA brought ERJ's out of the desert to stop us from getting more gates there. Those aircraft are not profitable, yet they operate them at a loss to stop us. Not a problem either, they can subsidize those losses elsewhere in their system or from the AAdvantage members. The big 4 have been allowed to grow so large that effectively they have the entire domestic market locked down. We can operate on like routes, but the ULCC model is perceptually inferior to that of the typical airline model. When comparing ticket prices, the slight "savings" we may offer is not great enough for most passengers to sacrifice some comfort or additional options the bigger airlines provide. The big 4 have found ways to make us as an option an afterthought when shopping for tickets. Yet our management has done nothing to counter this. Essentially the market power the big 4 now hold is insurmountable. It will take literally decades to organically grow any other airline to a size that can compete with economies of scale. Mergers are the only way now.

& to make matters worse, the DOJ is aiming to argue that merging 2 tiny airlines eliminates competition to the big 4, since a merging of 2 airlines means 1 less airline. So if no one else can merge, "for the sake of the consumer", the Big 4 will continue to drown out everyone else

As Mayor Pete said, we could end up with just Coke and Pepsi…. Never mind the fact that there are 4 that dominate the market, not 2, and the merger would create #5 which would still be half the size of #4…. Asked what they were doing to allow other airlines to compete on better footing for the consumer, he mentioned something about not allowing airlines to get too big by allowing mergers…. The horse is already out of the barn, Mr. Mayor! :rolleyes:

Absolutely. This issue has been created over decades of merger after merger. Now two small airlines are attempting to merge and it's the beginning of the end of the industry as we know it. They make these arguments, yet say nothing about the current beast they've created. Hopefully in a court of law, the truth is made evident to the judge and this lawsuit is laughed out. There really is no merit to the government's argument.

I am fairly certain that those remote gates in the E terminal at DFW went up for bid and Spirit either wasn't interested or didn't bid enough to get them.

If it’s not Florida related, Spirit doesn’t want it. I despise what this airline has turned into, and you made the right choice at your longevity to move on.

Tranquility, I'm not baiting, but honestly interested. Despise is fairly strong language and I know you've been around here long enough to have an opinion worth hearing out. I've been called into Miramar, literally on the carpet, and thankfully absolved more than anyone I know. So I too have an old, fat, grey haired dog in the fight.

Personally, the most involvement I have with whatever the current operational flavor of the day is to read through the old DMI's that were "cleared" so I know what to expect and where to find it in the COM. I can still actually find the COM by the way. Usually faster and more accurately my newer colleagues. Less bad days at work than good days, I could not care less about about seat pitch, bag fees, or anything behind the door except their safety and what little communication and comfort we can assuage the masses with.

Of course my myopic experience is only FLL centered, as you say, and many of our other bases from my perspective look like hell on earth. Remember when Nashville was going to be the new Miramar? WTF? That's a long drive to the carpet for anyone.

Merger or no, bubbles always burst, and the eye of Mordor is looking our way.

Obviously, you're referring to more global and strategic issues. I respect that, so what's up?

We did bid for them. AA overbid us and didn't even have the planes to park there. That's why they reactivated old 145s.

Its not that two small airlines are merging. I don't think DOJ cares if a 5% and 4% market share merger to become a 9% share airline. its that an ULCC is going to be GONE and on many routes, fares will rise substantially. JetBlue/Alaska would probably be allowed, but they have a problem with Spirit going away, which is why all the large airlines are FOR the merger, with the CEOs of United and American coming out publicly saying its not anti-competitive (because they don't have to deal with Spirit going forward.)

Just think how ridiculous that makes the government argument. They are telling a private, deregulated company that they have to be forced to sell tickets at (now unprofitable) low rates, just so consumers can have low rates.

Hey, the American way! Biden will bail out everyone! Even the EBT card paying spirit pax! Gots to give them away to gets to Vegas!

You can’t expect to be taken seriously when you use both “ridiculous” and “government” in the same sentence, when in fact those words are synonyms.