Checking in a bag is becoming an increasingly expensive endeavor.
09.02.2024 - 15:35 / skift.com / Spirit Airlines / U.S.Airlines / Ted Christie / Meghna Maharishi / Airlines
It’s been a rough few years for Spirit Airlines.
There hasn’t been much demand for the airline’s product. Pratt & Whitney geared turbofan engine issues have grounded several of its planes. It has had years of losses and a staggering $1.1 billion debt due in 2025. And perhaps, the biggest hit: A judge blocked its merger with JetBlue.
But Spirit CEO Ted Christie said the airline still has a viable path to survival during a call with analysts Thursday morning.
“This misguided narrative has been advanced by an assortment of pundits,” Christie said on the call. “However, back in the real world, we are focused on facts.”
Christie focused on Spirit’s efforts to strengthen its finances — the airline recently sold 25 aircraft and leased them back, allowing it to pay off $465 million in debt and net $419 million in cash.
“Liquidity is always king, and we have enhanced our levels to give us the necessary flexibility to successfully close with JetBlue or to pursue our stand-alone plans,” Christie said. “Above all else, margin repair is the key and we have been making network adjustments and cost decisions to recover our margin production.”
The merger with JetBlue would have been a lifeline for Spirit, which hasn’t been profitable since 2019. But a judge struck down the merger, arguing it would reduce competition in the industry and hurt consumers.
After the ruling, some Wall Street analysts speculated that Spirit would either need to find another buyer or risk filing for a Chapter 11 bankruptcy. JetBlue and Spirit recently filed a motion to appeal the ruling, and the First Circuit Court of Appeals will hear the case in June.
Christie said the initial decision against the merger was “ridiculous.”
“It’s beyond absurd for the government to claim a victory for the American consumer,” he said. “In fact, it’s ridiculous.”
The Spirit CEO read out lines from the decision that described the U.S. airline industry as an “oligopoly” that had become more consolidated through a series of mergers in the 2000s.
“Despite that explicit acknowledgment, the government continues to do nothing to address the anticompetitive structure of our industry,” Christie said. “Instead, they have just engaged in an expensive and long litigation process to block the merger of the sixth and seventh largest airlines that, when combined, would still be half the size of the fourth.”
Regardless of the outcome of the appeal, Spirit said it planned to return to a path to profitability as it appeared that demand for domestic travel was improving.
“Nonetheless, you can rest assured that the Spirit team is 100% clear and focused on the adjustments we are currently employing and will continue to make throughout 2024 to drive us back to cash flow
Checking in a bag is becoming an increasingly expensive endeavor.
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Spirit Airlines has announced plans to suspend operations at New Hampshire's Manchester-Boston Regional Airport (MHT) on May 8, according to Boston.com.The budget carrier said the decision is due to "ongoing operational constraints related to Pratt & Whitney GTF engine availability and seasonal demand for our MHT flights.""This decision reflects our continuing efforts to make necessary strategic shifts to enable Spirit to compete effectively in the current environment," Spirit added. "We apologize to our guests for any inconvenience, and those with reservations for May 8 or later will be offered a refund. Manchester-Boston Regional Airport is a great partner, and we look forward to returning with seasonal service next winter."Spirit operates nonstop flights to Orlando and seasonal service to Myrtle Beach, South Carolina from MHT. According to Reuters, the airline is the largest domestic operator of GTF-powered (geared turbofan) NEO aircraft and has been battling engine issues since last summer."MHT is grateful to Spirit Airlines for their service to the Manchester community for the last few years," the airport said in a statement. "We understand that difficult decisions have to be made in light of the Pratt and Whitney engine issue. It is important to note that this is a pause in service, not a withdrawal in service. MHT stands ready to warmly welcome Spirit back to the Manchester market when the time is right for them."
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