Spirit Airlines bankruptcy took a turn for the worse this week. President-elect Trump’s prior administration was friendlier to airline tie-ups but can Spirit wait out a solution?
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Spirit Airlines’ Bankruptcy
Last fall, Spirit Airlines filed Chapter 11 Bankruptcy in hopes of refinancing its long term debt. It secured $300 million just before it filed for bankruptcy protection but it wasn’t enough to keep the budget airline focused on leisure travel from the bankruptcy process. Once a hot merger and acquisition target, fellow ULCC, Frontier Airlines, and JetBlue Airways were engaged in a bidding war that ultimately JetBlue won at $3.8 billion. However, the Justice Department sued to stop the acquisition offering no terms nor concessions for approval (as it customary) and a federal judge struck the acquisition down.
Armed Security Personnel Walks Latest Layoffs Out of HQ
According to reports on social media and Airways Magazine, a new layoff of 200 staff members at Spirit Airlines Headquarters involved armed security personnel escorting employees out the door. The Facebook account for Aero Crew News on Facebook claimed to have multiple reports.
“Aviation airline crew groups on social media indicate that armed security personnel were present during employee dismissals at Spirit Central, the airline’s headquarters and training center in Dania Beach, Florida.
According to one commentator, “I’d be emotional too if the CEO of the place I worked took a 3.8 million dollar retention bonus and then my position was eliminated in downsizing efforts to trim cost due to the bankruptcy. So armed security seems understandable.” – Airways Magazine
It’s possible the determination to used armed staff vs unarmed security was a conscious one but this writer doubts it was a decision made by Spirit leadership.
Trump’s Administration Welcomed Airline Tie-Ups, Avoid Early Disasters
The Northeast Alliance, a codeshare relationship between American Airlines and JetBlue Airways in the US northeast was approved under the prior Trump administration. President Joe Biden’s justice department sued to reverse the partnership and won (though the carriers have expressed a desire to appeal the ruling as of late.)
Frontier edged closer to revisiting the topic at the last moment before Spirit ultimately filed for Chapter 11. Biden’s DOJ sued to unwind the NEA and then sued to block though it allowed Alaska’s acquisition of Hawaiian Airlines.
There’s no question the Trump Administration will want to avoid the collapse of an airline early in the President-elect’s second tenure. The author of The Art of The Deal will likely try to get something done as will his nominated Labor Secretary, Lori Chavez-DeRemer, a pro-union, pro-worker leader the Atlantic called, “The One Trump Pick Democrats Actually Like.”
Too Little Too Late?
Even if Trump’s administration would allow another carrier to merge with or acquire Spirit Airlines, shareholders have already been significantly harmed by the bankruptcy filing and latest rounds of cuts, unlikely to be reversed in a new deal. But as 200 staffers headed for the doors, cardboard boxes in hand, is there enough time for another airline to come in and buy the airline rather than just the assets?
President-elect Trump’s pick for Attorney General, Pam Bondi, sat for Senate confirmation hearings this week. While she was questioned on loyalty, prior ties, and whether she believed Joe Biden duly won the 2020 election, she was not questioned about her approach to mergers and acquisitions. However, in her opening statement she said,
“On the civil side, we worked to protect consumers. We tackled everything from overreach by big tech companies to off-label prescription marketing.” – Pamela Bondi via PBS
But Spirit is bleeding cash, it’s turned all of the levers it could before filing for bankruptcy, and with the latest layoffs it’s clear that a conclusion in one form or another is approaching. Can the newly elected president find a suitor for Spirit to join? Will Spirit be able to get an audience with the Trump team who has boasted a significant “Day One” agenda? His stated priorities range from lowering prices for groceries, stemming illegal immigration, mass deportation, a reduction in violent crime, trade wars, repatriating manufacturing, and purchasing Greenland from Denmark.
Conclusion
Spirit continues to take steps to preserve itself but it seems like it’s biding its time to get to a friendlier regulatory environment. That said, Frontier had a shot and Spirit can’t possibly be much cheaper than it was before, JetBlue probably no longer has the headwinds and investment support even to buy the assets. United signed a deal to top-up its fleet while it waits for Boeing 737 Max-10 certifications, in essence, without a clear path as designated by the incoming administration, it’s going to be more tough sledding and Spirit might not have the time to wait for a resolution.
What do you think?
You think as Trump starts his presidency he cares about the fate of NK!? Much bigger fish to fry
@SMR – I made a pretty clear case that it’s unlikely he will, thus Spirit might not be able to wait out getting on his agenda.
Hiring armed security for layoffs is SOP at this point for multiple reasons. Not defending or justifying the reasons for it, but for the safety of everyone it’s the correct decision.
And Spirit won’t end up in an equipment auction, someone will end up with the majority of the assets. It should have happened already but that’s another debate about the Biden DoJ.
@Dave Edwards – I agree with everything you have here.
Maybe it is time to let this pathetic excuse for an airline just pass away.
So many inaccuracies in this article, I guess this should be expected from a points and miles travel blog pretending to be a reputable news outlet.
1) Yes, Spirit downsized corporate and training department staff to reflect a smaller airline moving forward. This was announced when CEO Ted Christie announced the $100 million cost savings initiative in early 2024 with the vast majority of that savings coming in the form of labor cuts. Spirit then sold 23 A320/A321 aircraft and those cuts became finalized. Pilots have already taken a hit (twice). F/A’s have an effective zero hour line LOA/MOU and robust natural attrition negating involuntary furloughs to date.
2) Spirit has corporate security at HQ and many were told of their position being eliminated via Zoom while some arrived and were simply escorted to a room wherein they were notified of the elimination of their position. This is standard corporate behavior.
3) ACN is a blog that is consistently incorrect, not a source of news. I could provide countless posts displaying ACN’s inaccuracies and mischaracterizations , I’d expect better of a Delta pilot. IYKYK.
4) $300 million wasn’t “new debt” prior to CH11 filing, it was financing in place with Citi well before the declaration that had been undrawn, NK Simply drew that line down shortly prior to the CH11 filing.
The amount of inaccuracies I see in daily posts regarding Spirit on the internet is unfortunate and you’re blog post is simply another that shouldn’t be found under “news” on Google.
@Ned’s Kid – I don’t actually see inaccuracies in your critique but I will address each point.
1) While you provide color commentary around the layoffs, this is something we have also covered here before from the aircraft delays to equipment sales, deferred deliveries, P&W engine complications, etc. While I appreciate that added context, I don’t see an inaccuracy here.
2) Again, I don’t think I had any inaccuracies. If you have inside knowledge of staff members being moved to a room, terminated, and then escorted out by armed security. Where the inaccuracy is in the post. I cited my source, was clear it was made on social media by witnesses (or former employees) and where the article was found. I don’t see a dispute of the evidence. If they were not armed, state that and counter the narrative, if they were armed then it stands as accurate.
I didn’t need to add this but chose to anyway: “It’s possible the determination to used armed staff vs unarmed security was a conscious one but this writer doubts it was a decision made by Spirit leadership.”
I’m not sure how to be more assumptive of that not being a conscious nor intentional effort. If anything, I am suggesting it is the norm. But if I choose not to note it or selectively edit the report, is that not then placing inaccuracies? If one were to say, “Police shoot 15-year-old girl” that’s not exactly the same as “Police shoot gun-wielding 15-year-old girl” it’s inaccurate to choose not mention the weapons, right?
3) I can’t speak to your past experiences with ACN nor Delta pilots (I don’t know any) and I cast doubt on anyone reporting secondhand information from social media without supporting evidence, thus the notice that Airways Magazine was using ACN and social media as their source. However, while you state ACN isn’t a news source (I would agree), I didn’t cite them, I cited Airways Magazine whom I do trust and is considered reputable media. If they are vouching for ACN, or specifically this one post on ACN, I am happy to include the additional context. I’m not sure your personal opinions, valid as they may be, qualify you to determine that the entire outlet is invalid. Further, you do not seem to dispute in responses 1, nor 2, that this happened. So, if it happened and ACN happened to be the outlet, does that make it inaccurate? If you decide that XYZ news is biased and inaccurate and they report a plane crash, did they plane not crash?
Without evidence that this is inaccurate and the source was wrong, again, there’s no inaccuracies, you just don’t like a source.
4) This is actually an inaccuracy on your part and here’s why. They may have come to an agreement on a credit line some time ago, but without drawing it down and starting payments, they didn’t actually accrue the debt, it’s an asset to the airline at that point. In simpler terms, if you apply for a Home Equity Line Of Credit (HELOC) and are approved for $30,000 and you don’t draw on it for some time, you don’t have any payments and haven’t acquired any debt. Once you draw that down, you now have both.
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Respectfully, you’re attributing inaccuracies you’ve seen elsewhere in the media regarding Spirit to this post for which you’ve not demonstrated anything untrue. It seems as though you have additional inside information and a dislike for some of the sources but there’s not anything false in the produced work. And for the record, I have met Ted Christie a few times and was asked to interview him by the The Wings Club in New York. I’ve been nothing but fair, cordial, and a defender of the new Free Spirit loyalty program which I maintain is as generous or more so than any competitor in the US.
Also, we don’t designate how Google chooses to list us. Perhaps over the more than 12,000 posts produced over the last 15 years on this site, Google has found us to be more accurate than inaccurate, but I can’t speak for them.
Spirit will be aquired, or be the one acquiring.
Lol. Spirit can’t afford to buy anyone.
What do I think? That this was announced poorly written article. That’s what I think.
As far as Spirit goes, I hope they find a path forward
* an incredibly poorly written article
shut it down and get rid of the worst airline in America
“It’s possible the determination to used armed staff vs unarmed security was a conscious one but this writer doubts it was a decision made by Spirit leadership.”
I understand Luigi Mangione is out on parole….have gun…will travel!!
Mango one is out? Did I miss Sleepy, Creepy pardoning him?? Maybe that crackpot Hochul did!
Mangione