Can someone explain to me how Spirit got here with the speculation of bankruptcy? 10 years ago it had pretty much the highest profit margin in the industry. The fares really were never that cheap compared to everyone else after fees, just like now.

The plane issues, I'd imagine lost revenue is covered 100% by manufacturer.

Attrition, always had it, but hiring was always able to keep up with attrition, like now.

I always thought the Jetblue merger was because JetBlue needed Spirit to grow in order to compete and not that Spirit needed JetBlue to survive.

Why is Spirit all of sudden in apparently bad shape? I don't get it, what has changed?

It seems like after this contract round everyone else have had. Spirit ought to have a massive cost advantage. What made Spirit all of a sudden not work while others are returning to massive profitability.

 

1. Pratt is paying leases on down airplane. They are not paying for lost revenue. Spirit will have to sue them for it. That’s a big hit.

2. You are right about the initial reason for the merger.

In the interim when spirit thought they would become profitable post Covid the engine issues started and demand for the ULCC product went in the toilet. Passengers do not want what we are selling. Those that do can find select “basic” seats on legacy airlines and not deal with the trashy ULCC airlines. Also big four have predated on Spirit by adding capacity at a loss on our routes to squeeze us. I’m years past they didn’t have the resources to do that. They do now and are doing it. The exact reason for the merger, be able to compete with the big 4. Right now they can just put anyone out of business that becomes a threat.

 

Perhaps a little bit of everything?

Covid somehow seems to have reshuffled the deck. Where the little guys had real good balance sheets going into Covid, the big guys after being kept afloat came out stronger.

The legacies adding in pricing tiers (basic economy or whatever you want to call it) that mimicked Spirit pricing to better compete.

An economy that has been hurting the poorer people in the country via inflation.

Engine issues.

 

What happened?

The industry changed.
10 years ago all the big boys had highcosts and high fares. Now those costs are gone and they started their basic economy fares. Any edge the LCCs had is now gone and they have the same costs and fares as the bigboys but without any of the extra rev.

 

I think your economy statement is correct. Most Spirit passengers were the people living paycheck to paycheck. Inflation has decimated them and the Spirit model. The richer passengers have not shifted to Spirit as predicted.

 

Hmm lets see, just flying as a pax for the last 2 years: Customer service down the ****ter (just look at philly.. what a dump), fares matched by everyone else and the biggest kicker for me is the absolutely terrible pairings and frequencies. With that being said, the Spirit big seats up front are the best bang for the buck in the industry.

 

I’m not sure Spirit has made an annual profit since 2019. Whatever changed started a while back. There’s a decent chat about it in this podcast.

https://podcasts.apple.com/us/podcas...=1000641925767

 

Not even just the big guys. Even jetblue came out with "basic" seats. the ULCCs should have seen that comming, such a simple thing and whamo , the other airlines have their own little internal ULCC on every flight to undercut.

 

Spirit has been suffering from the Pratt engine issues since they first got them. The motors have been a disaster for them.

I remember seeing bunches of brand new Spirit NEOS sitting with no engines on them in DFW 4 or 5 years ago. Two totally separate issues btw. Currently they have 40 planes grounded! That's brutal to the bottom line.

I don't think Spirit is going out of business though. They have a lot of cash on hand right now. If they do decide to try a trip thru chapter 11 they will come out the other side. Now, they could certainly get bought out in Chapter 11, but the planes will keep flying. At least the ones that have friggin engines on them.

The posts above regarding the economy are mostly correct. Lots of people just haven't felt the pinch that makes them look for cheaper alternatives yet. It's coming though. People are still spending like we just got out of covid lockdowns. It's pretty amazing actually. Credit card debt is at an all time high, car loans, mortgage payments, etc are all at all time highs. People are dropping money like there's no tomorrow, and that hasn't been good to the low cost airlines.

The economy and people's spending habits are constantly shifting and right now the ulccs have found themselves in an oddly difficult spot. The one thing I don't really agree with that's been said above is touting the success of the basic economy tix at the big airlines. I don't think that's as big a success as some. I think most people are still paying for high dollar tickets.

I have been a firm believer in the ulcc business model and I continue to be. The most surprising thing to me lately has been the financial success of the legacies the last 2 years. They just keep raking it in. But it can't last forever and when travel demand and people willing to pay $750 fur a round trip domestic ticket wane, they will be stuck with their super high cost structure.

Also, for the younger, newer crowd; don't ever forget that this is a brutally hard industry. The history of airline bankrupbankruptcies, furloughs, pay cuts, etc is a long and rich one.


Edit: I thought this thread was in the Frontier subsection. My bad. I thought I was writing to the Frontier pilot group. Sorry if this sounded weird

 

Legacy ticket price isn’t too much higher than the LCC’s. Sure what route and timing do factor in to pricing. But on average when you have to pay for a checked bag and buy onboard items, the pricing comes out near what it would have to be all inclusive on a legacy.