Spirit Airlines has emerged from bankruptcy only to again warn it may not survive a year, which carriers will buy Spirit Airlines fleet if it goes under?
Bankruptcy Warning
This week, Spirit Airlines management issued a concern to the market and shareholders that it could have trouble surviving to the end of 2026. CEO, Dave Davis indicated that he was legally required to share his concern in the manner in which he did, though he expressed confidence in his plan and approach to the turn around.
“Because of the uncertainty of successfully completing the initiatives to comply with the minimum liquidity covenants and of the outcome of discussions with our stakeholders, management has concluded there is substantial doubt as to our ability to continue as a going concern within 12 months from the date these financial statements are issued.” – Spirit Airlines 10-Q
Matthew wrote this week that while Davis downplayed his statements, that flight attendants should remain prepared for the carrier to fail in its rebuild mission. While I am personally rooting for Spirit given a number of unique benefits I believe the airline provides for aspects of the market, the rest of this post will assume the carrier doesn’t make it.
Carriers Who Might Purchase Assets, Take Over Routes
JetBlue and Frontier seem like the obvious choices to grab Spirit Airlines equipment and perhaps take over routes the carrier operated. If that’s the case, JetBlue would likely focus on Fort Lauderdale where it already has a considerable presence, while Frontier or even Allegiant would pick up Las Vegas and Orlando with the new aircraft.
However, JetBlue doesn’t appear to have the same appetite it once had and there’s no telling if finance will be as ambitious as it was for an outright merger. Frontier has also struggled in quarterly results and may not be able to pull off the asset purchases without the combination.
Alaska and Southwest have both indicated they could be open to new aircraft types, and while Alaska has been firmly Boeing (outside of some Embraer purchases and its acquisition of Virgin America and Hawaiian) this could be an opportunity to further expand its footprint in a meaningful way. Southwest is going through its own renaissance at the moment and it seems an unnecessary complication unless the aircraft were offered at such a deep discount management couldn’t say “no.”
American and United both fly A320s and could be in the market. American would likely replace older equipment ahead of schedule but it wouldn’t keep any of the routes from Fort Lauderdale, instead moving them to Miami and throughout the system.
United is the most interesting of them all. The airline seems to be on firm financial ground, is looking to shake things up (with its partnership with JetBlue), and has been rumored to be interested in some Florida presence as a focus or hub city. It’s recent tie-up with JetBlue and the airline’s history with its failed Spirit merger could ruffle feathers, however.
Delta is always looking for a good deal and has two unique characteristics the others don’t: it has the cash to buy the airline outright (if it was approved by legislators) and it has some aging, less capable, less fuel-efficient aircraft it needs to replace. It has a history of buying cheaper, older aircraft at great prices to fuel growth. This would be very much in-line with its model. It also has the ability to take over the new orders Spirit has committed to purchase from Airbus.
Conclusion
If we presume that Spirit cannot make it through 2026 and is sold for parts, a single carrier like Delta, could come in and buy the majority at a significant discount and expand its market position even beyond its current level. It’s also a possibility that a consortium of carriers will buy equipment, routes, or stations that make sense for their strategy – if the government allows a Pan Am-style dissolution. And while I would personally prefer Spirit to remain as it is and the market to respond positively to its product (the only option in the US for European-style business class with an open middle seat), it may not happen.
What do you think?
I think we could see United take Spirit’s A321neos and cancel its own remaining 737 MAX 10 orders in favor of an airplane that is actually certified. They’ve already gotten frustrated with Boeing and started substituting some of the MAX 10s to MAX 9s, and ordered additional neo frames.
I do not think we’ll see an attempt to acquire a Florida hub. That would be a waste of a lot of time and money in a low-yielding market that already has a bunch of competition. UA doesn’t need to have a major Florida presence beyond a spoke.
Should UA still desire a south east focus, it would be easier and cheaper to just buy JetBlue under the current adminstration. It would get the Florida foothold (FLL) as well as the JFK gates it so desires. Any complaints would be offset with offers of gates and slots at EWR to appease the plaintiffs.
The rest of B6 operations could be blended into the existing UA system improving its standing at LAX, BOS and DCA.
Good riddance. I worked for Spirit for a year in operations as an aircraft dispatcher. They fire employees days before their one year probation is up in effort to avoid paying vacation and annual raises. My paycheck was NEVER the same. I worked 40 hours overtime and get paid for 10. It is an absolutely terrible culture and company to work for.
This is 100% false. I looked through our records and nobody by your name was ever employed by Spirit Airlines.
Hummmmm……if Spirit Airlines allows employees to access company records for non-business related purpose, God knows, how many other sloppy, unprofessional things go on.
Anonymous user name thinks another user name is a real first and last.
There was a report in the Las Vegas Review Journal this week that Spirit has 50 planes grounded with engine cracks that will take a year to fix each.
Much of the domestic traffic decrease in Vegas is due to Spirit reducing flights. Which also goes to the larger narrative of what type customer Vegas is currently losing. With gaming win up and overall visitation down, it’s an easy generalization to say the lower end consumer isn’t coming.
Can’t see anyone being interested in those type “assets” unless literally available for pennies on the dollar.
That’s an old story taking about the GTF engines. It’s not anywhere near that bad now, although they have a shocking number of planes taken out of service for economic reasons.
Spirit and Frontier’s fleet is heavily leased. Aircraft are global commodities.
If any US airline has an advantage, it is Delta for its engine overhaul rights for the Geared Turbofan and their ability to get Spirit’s grounded planes back in service
No American airline will take them. The only planes that might be of interest are the A321neos. United’s A321’s use the P&W GTF while Spirit’s are the cheaper, less performing CFM-56’s. American and Delta have what they want on the timetable they want.
There might be a little picking here and there, but virtually hall will head to the desert.
This is wrong. All of Spirits NEO aircraft have the P&W engine. I should know I fly them.
“the only option in the US for European-style business class with an open middle seat)” – I think you Mean Frontier’s UpFront Plus?
@Rob Hemming – I should say they were the first to market. But that said, it also has the Big Front Seats (or whatever they are called now) which are in essence the same seat width and size (2×2) as Delta, American, and United domestic first class, and they have the same seat pitch as the most recent United domestic first offering. Those seats are routinely sold out when I fly Spirit.
Don’t be surprised if several of the jets (both NEO & CEO) are dismantled to alleviate a severe parts shortage.
An A220 (Egypt Air) and two A321NEO (Indigo Air) will be or have been dismantled for parts.
JetBlue will release the last of its E190’s with a batch of twenty-three GE CF34 engines which are highly desired as spares and parts.
The above will fill in a pipeline of needed parts across the MRO industry.
Do you realize spirit do not own anything. Everything they have is leased, and in a chapter 7 liquidation will be returned to the owners. Spirit will not survive because they own nothing of value except for a few DCA & LGA slots. JetBlue will get as many gate leases as they can from FLL airport and a few of the NEO’S from the lessors. Everything else will be parted out by the owners as other airlines will want bits and pieces but no one wants the whole thing.
If Spirit goes under, the Spirit name may be useful for Avelo if the price is not too high. Avelo doesn’t need Spirit planes.
There are a number of factually incorrect statements about engines.
The A320CEO is powered either by IAE V2500 series engines or the CFM 56 family of aircraft.
The A321NEO is powered either by the GE/Snecma LEAP engine or the P&W GTF.
The engine that powers the E190 is the GE 34 and is substantially different from the engines that power the 737NG and A320CEO family aircraft.
Spirit’s A320NEO family aircraft are powered by the GTF which also powers B6 DL and F9’s 320NEO family aircraft as well as DL’s A220 family. UA also has GTFs but have a newer fleet and have had less impact.
There is not an engine or parts shortage for previous generation engines sufficient for airlines to cannibalize otherwise normally wearing airframes.
There remains parts shortages for replacing defective parts in the GTF engines so some airlines are swapping engines and in some cases choosing to cannibalize the airframe but P&W expects to have a sufficient number of spare parts to replace defective engine parts.
The MRO capacity to replace those parts does not necessarily align w/ the availability of parts.
As the only US airline MRO for the GTF, DL does have the ability to prioritize repairs of its own GTF engines but there is no evidence that DL is getting any priority in getting parts for its fleet any earlier than other airline. DL can and would have the ability to get NK’s engines back in service if they had control of those airplanes.
and NK still does not own most of its aircraft so they don’t have much control over where their fleet goes if they cease operations or the leasing companies demand to get the aircraft back which they could do in bankruptcy.
NK has already said it is selling some A320CEO family aircraft but it isn’t known yet where they will go.
The only real discussion about how might take what is FLL since that is the only part of NK’s network where they are the largest carrier.
B6 could benefit from NK’s failure but they do not have the planes to be able to rapidly expand. It isn’t clear that anyone else can swoop in just stand up a large FLL operation.
Me!
I want some of them!!!
(I’m 100% serious)
United is the answer.
Short-term answer in FLL will be a”yes, and” approach:
1. Legacies up-gauge to hubs with more frequencies, bigger planes. Easier to stand up quickly without too much long-term commitment. Neither, DL, UA, nor AA are fully using the gates they have.
2. B6 grabs as many gates as it can and starts to grow FLL as quickly as aircraft capacity allows. Expands partnership with UA to include FLL. UA expands seats to its hubs
3. G4 grabs a couple of gates, expanding operations to third / fourth-tier markets a la NK.
4. WN grabs a couple of gates, opportunistically adding service here and there.
5. AA does nothing, attempting to shift traffic to MIA.