As Spirit Airlines emerges from bankruptcy protection, it reported its 2024 financial results this week and the numbers are bleak, suggesting a near-insurmountable hole the budget carrier must quickly climb out of. Can the carrier find a way forward?
Spirit Airlines Reports Staggering Losses In 2024 Financial Results
I don’t mean to be alarmist and I’ll start by saying I am rooting for Spirit Airlines. As I recently shared, Spirit Airlines does keep pricing in check and for all the fun we have laughing about some of the clientele that Spirit attracts through its cheap fares, I view the carrier as an important competitive presence in the US market.
But One Mile At A Time flagged Spirit’s rough 2024 financials and rough may be the understatement of the century:
- Operating revenue – $4.9 billion, a decrease of 8.4% from 2023
- due to a 3.5% decrease in traffic and a 5.1% decrease in average yield
- Operating loss – $1.1 billion
- representing a negative operating margin of 22.5%, compared to a $496 million operating loss in 2024
- Net loss of $1.2 billion,
- 2023 net loss was $447 million
- negative change due to higher operating costs and lower operating revenues
- Total revenue per passenger flight segment – $111.21
- 8.5% less than 2023 ($121.58)
- Cost per air seat mile (CASM) not including fuel – 7.97 cents
- 12.9% more than 2023 (due to higher wages, aircraft rent expenses, landing fees)
Yes, 2024 was a rebuilding year for the carrier. Yes, it shed $795 million in debt in bankruptcy.
But how can the carrier possibly go it alone with numbers like these? They are horrible! Its operating margin was -22.5%! And we certainly cannot say the numbers are “cooked” to advance Spirit’s restructuring interests…that would be fraud. So I take these numbers at face value and wonder:
- Who will Spirit merge with?
- Will a national budget carrier combining Spirit, Frontier (and maybe Allegiant and Sun Country as well) create more sustainable margins?
- Might Spirit resurrect the JetBlue deal, which the Trump administration might not challenge?
- Is there any scenario in which Spirit could go it alone?
It’s also fair to remember the Pratt & Whitney engine issue. Just this week, Spirit received $150 million in compensation for its grounded Airbus jets due to issues surrounding its geared turbofan (GTF) engines. That’s hardly chump change and recognizes (sort of like the demise of the old Norwegian Air after constant trouble with Boeing) that not only market dynamics are in play, but other issues beyond the carrier’s control. This engine issue is not resolved and additional compensation is expected to stretch into 2026.
Spirit has blamed this issue for “reduced, suspended or discontinued service in a number of cities.”
The Cloudy Future Of Spirit Airlines
I know US travelers have voted with their wallets and chosen legacy carriers over Spirit as those network carriers have been better able to segment their product through attractive basic economy offerings, but I am convinced there is a market for budget carriers…just like in Europe and Asia, where carriers like Air Asia, Easy Jet, Ryanair, and Wizzair have performed quite well.
I also sense (and certainly I hope I am wrong) that with all the economic uncertainty of the new administration, a recession is coming and that should help Spirit as travelers tighten their wallets and look for better deals.
But as United Airlines CEO Scott Kirby likes to point out, the fixed costs for these carriers (higher labor costs, landing fees, and government taxes) make it very hard for any budget carrier to stay afloat. The US is an expensive market to operate in and the high cost of doing business makes it very difficult to offer to “cheap” fares and still turn a profit.
CONCLUSION
Spirit Airlines reported its 2024 financial results and the numbers are devastating. The carrier has a deep hole to climb out of as it emerges from bankruptcy. I’ll continue to poke fun of the poor behavior that tends to be clustered on Spirit Airlines, but I am rooting for the carrier.
> Read More: United Airlines CEO Analyzes The Airline Industry…And Names Names
image: Spirit
They are toast. There is simply no way they can make money. The price they can command doesn’t cover their expenses.
Since Spirit can’t cover its operating cost, only two options left:
Declare Chapter 11 again (Chapter 22) and look for dance partners:
– White Knight: JetBlue (The Price is Right!!)
– Black Knight; Carl Icahn or Frank Lorenzo (Déjà vu, its the 80’s all over again!!)
– Stalking Horse: Frontier (Now I’ve Got You!!)
Or declare Chapter 7:
– Circling Vultures: Delta, United, & AA looking thru the bargain bin for airport slots, gates and NEO airframes
Is anyone actually wishing for its survival?
Yes. I’ve never flown Spirit, but I want them to succeed simply to put some competitive pressure on the US3 to keep their fares low. Even if you never set foot on a Spirit airplane, their presence in the market helps you.
100% agree.
Clearly Ted Christie and his management team have absolutely no idea what they are doing