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Miami Herald
4 days ago
- Business
- Miami Herald
Spirit Airlines just sent an ominous financial message. Here are 5 takeaways
Spirit Airlines has issued a warning that it may not be in business in the next year despite recent restructuring and efforts to boost revenue. The Broward-based company disclosed the issues in a financial statement submitted to the U.S. Securities and Exchange Commission, highlighting the airline's financial challenges. FULL STORY: Spirit Airlines issues warning about its future. Will company stay in business? Here are the highlights: Spirit Airlines expressed doubts about its ability to meet financial commitments with current cash reserves and future revenue forecasts. The airline's statement indicates significant uncertainty about its continued airline has recently introduced new routes from Fort Lauderdale to destinations like Grand Cayman, Belize City and Key West, hoping these would revitalize its business. Despite these efforts, economic conditions and weak demand for domestic leisure travel pose emerged from bankruptcy in February and has since appointed a new president, Dave Davis, while attempting to shift toward more premium offerings. But the Broward-based company still faces financial hurdles and may consider selling additional airline's financial filing suggests that failing to improve liquidity could lead to defaulting on debt obligations and credit agreements. This situation underscores the precarious financial position Spirit the challenges, Spirit remains the top airline at Fort Lauderdale-Hollywood International Airport by passenger volume. The company plans to operate 100 peak day flights at the airport by the end of 2025. The summary points above were compiled with the help of AI tools and edited by journalists in the Miami Herald newsroom. The full story in the link at top was reported, written and edited entirely by Miami Herald journalists.
Newsweek
4 days ago
- Business
- Newsweek
How Spirit Airlines' Problems Could Affect Your Flights
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Budget carrier Spirit Airlines has warned that it could soon go out of business unless it successfully implements a number of major changes. Spirit emerged from Chapter 11 bankruptcy in March. However, in a filing this week with the Securities and Exchange Commission, the company said there was "substantial doubt" as to whether it could survive for another 12 months unless it raised more cash. When approached by Newsweek for comment, Spirit declined to provide further information beyond what was included in the filing. However, the company shared an internal email from CEO Dave Davis in which he outlined changes being made at Spirit and promised to "transform and protect this critical business." Why It Matters Spirit Airlines has long been considered a troubled carrier, amid years of mounting losses, rising debt and failed attempts to resurrect the company through a blocked merger with JetBlue. The downfall of Spirit—among the most widely used airlines in the U.S.—could hold major implications for travelers, particularly those who have previously benefited from its low-cost offerings. A contraction in its operations could reduce flight options, boost rivals such as Frontier or Southwest, and even lead to higher prices—as one of the major forces behind fare competition would be removed from the marketplace. A Spirit Airlines Airbus A320-271N takes off from Los Angeles International Airport on January 24. A Spirit Airlines Airbus A320-271N takes off from Los Angeles International Airport on January 24. AaronP/Bauer-Griffin/GC Images What To Know Spirit's current difficulties stem from a combination of weak leisure travel demand and elevated domestic capacity, which the company said on Monday had led to a "challenging pricing environment." The airline reported a net loss of $245.8 million for the second quarter, compared to a loss of $192.9 million during the same quarter last year. Shares of its parent company, Spirit Aviation Holdings, plummeted by about 40 percent on Tuesday following the announcement. The company has already taken mitigating measures to try to shore up its finances amid these mounting challenges. In July, Spirit said it would furlough about 270 pilots later this year, while also demoting another 140 in an effort to conserve cash. Preempting fears this could affect its operations, Spirit told Reuters, "We are taking necessary steps to ensure we operate as efficiently as possible as part of our efforts to return to profitability." How Could This Affect Travelers? Should Spirit fail to emerge from this challenging period, experts believe the effects could extend beyond its own passengers, reshaping flight options and fares across the low-cost travel market. "Spirit may be signaling the beginning of the end of their operations unless they can manage a dramatic turnaround," said Kerry Tan, a professor of economics at Loyola University. "Prospective customers should be wary of the risks when booking flights." Tan, whose research focuses on the U.S. airline industry, told Newsweek that, should Spirit go under, travelers would be able to turn to low-cost alternatives such as Frontier and Allegiant. However, he added that both had been "suffering from below average on-time performance." The presence of a low-cost carrier such as Spirit in the marketplace has also forced other airlines to lower their prices to remain competitive, and Spirit's departure could undo some of these effects. "It would be hurtful for passengers to lose an airline that put downward pressure on airfares," Tan said. Spirit has faced financial difficulties for many years, but Volodymyr Bilotkach, a professor of aviation management at Purdue University, told Newsweek, "This time, I feel that going out of business is a real possibility for the airline." Bilotkach said Spirit would likely attempt to sell off its assets en masse, particularly aircraft, which other carriers would buy to increase their own capacities. On Monday, Spirit said it was planning to take further "liquidity enhancing measures," including the possible sale of aircraft, real estate and excess airport capacity. Economist Clifford Winston told Newsweek that the immediate effects on travel could depend on whether other airlines seek a merger with Spirit—as JetBlue did between 2022 and 2024—or wait until it is liquidated to buy its aircraft at fire-sale prices. He said Spirit's departure would have little effect on highly competitive routes that are already overserved, but "low-density routes" could suffer. "But there are not that many people on those routes," Winston added. "So in terms of the big picture, I don't think you're going to see much [change]." Likewise, Bilotkach anticipated minimal disruption to flight availability on key routes should Spirit shut down, with competitors likely to fill gaps left by the airline. However, given Spirit's broad and varied network, he said some of its less-trafficked routes could be lost. "One set of customers which might be affected are holders of Spirit Airlines' branded credit cards and generally loyal Spirit customers," he added. "They might find any accumulated points worthless, especially if the airline simply goes out of business rather than merging with someone." "Once the possibility of a bankruptcy arises, it effectively becomes a self-fulfilling outcome," said Jonathan Williams, a professor of economics at the University of North Carolina at Chapel Hill. "Passengers don't want to book with a carrier that is canceling flights, removing markets, furloughing pilots, or potentially compromising safety for cost savings (i.e., a short-term time mindset to preserve cash)." "If they do go under, it will not be great for the industry," he added. "They've served an important role in the low-cost carrier space, offering a source of intense price competition for the network carriers that will be hard to replace." Williams told Newsweek that smaller low-cost carriers such as Breeze or Avelo "don't have the assets to step into that role yet." What People Are Saying Spirit CEO Dave Davis wrote in an email to employees shared with Newsweek: "Spirit is a critical part of the U.S. aviation industry. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. We remain hard at work on many initiatives to protect our unique franchise, our valued Team Members, our business partners and our Guests who place their trust in us every day." Ernest Arvai, the president of the aviation consultancy AirInsight Group, told Newsweek: "Spirit just emerged from bankruptcy a few weeks ago, with a plan to become profitable again, but the economic environment—particularly uncertainty over tariffs and inflation, have resulted in consumers rethinking their decisions on vacation spending." He added: "Should Spirit go under, another of the ultra-low-cost carriers would disappear, leaving pricing in the hands of the larger carriers and reducing competition in the market." Ian Savage, a transport safety and economics expert, told Newsweek: "This warning by Spirit Airlines is not unexpected. Spirit's main weakness is that they operated in head-to-head competition on the routes of the major carriers. The major carriers then undermined Spirit's competitive advantage by introducing basic economy fares. "In contrast, other ultra-low-cost airlines such as Allegiant Air, Avelo Airlines and Breeze Airways have chosen routes and airports that do not directly compete with the major carriers. I am skeptical that Spirit can effectively up-brand themselves with premium offerings or change their network sufficiently quickly to avoid eventual liquidation." What Happens Next In its quarterly filing, Spirit said it would "continue to experience challenges and uncertainties in our business operations and expect these trends to continue for at least the remainder of 2025."
Newsweek
4 days ago
- Business
- Newsweek
Spirit Airlines CEO Breaks Silence on Company's Struggles
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The CEO of Spirit Airlines has told employees that significant efforts are being made to stabilize the embattled carrier, which this week reported facing critical financial difficulties. In a quarterly filing with the U.S. Securities and Exchange Commission on Monday, Spirit said profitability struggles and weak demand had raised "substantial doubt as to the company's ability to continue as a going concern within 12 months." However, in an internal email obtained by Newsweek, CEO Dave Davis told employees that this wording was "required by our outside auditors to convey that there is risk if we do not make changes. But, we are." Why It Matters Spirit has long been grappling with declining demand and related financial strains, which led to it filing for bankruptcy in November. While the airline emerged from the Chapter 11 process in March, the latest warning has reignited concerns that the U.S. could soon lose one of its major low-cost carriers. As experts told Newsweek, the departure of Spirit could ripple through the entire U.S. airline industry, leading to near-term issues for travelers and higher prices in the future, given that the company's budget offerings have in the past served as a major source of fare competition. A Spirit Airlines Airbus A320 taxis at Harry Reid International Airport behind parked aircraft in Las Vegas on March 15. A Spirit Airlines Airbus A320 taxis at Harry Reid International Airport behind parked aircraft in Las Vegas on March To Know In its quarterly filing, Spirit said "adverse market conditions," including low leisure travel demand and surplus capacity, had resulted in a "challenging pricing environment." The airline reported a net loss of $245.8 million for the quarter, which ended on June 30, significantly widened from the $192.9 million loss over the same period in 2024. In the email to employees, Davis acknowledged that the report had "generated media coverage and, naturally, a lot of questions." Davis, who took the helm at Spirit in April, said that during his tenure, the company's leadership had "developed a plan that leans into Spirit's strengths, while moving away from the elements of the business that no longer work." This, he said, included "strategically growing our network in stronger markets with more opportunities." Davis added that the company had also faced "difficult decisions," such as whether to cancel "unprofitable routes." "By doing so, the team and I are confident that we can build a Spirit that will continue to provide consumers the unmatched value that they have come to expect for many years to come," he added. The company has already taken mitigating measures to try to shore up its finances. In July, Spirit said it would furlough about 270 pilots in November and demote another 140 in October to conserve cash. The airline said at the time, "We are taking necessary steps to ensure we operate as efficiently as possible as part of our efforts to return to profitability." On Monday, Spirit said in its filing that it was considering further "liquidity enhancing measures," including the sale of its aircraft, real estate and excess airport capacity. What People Are Saying Spirit CEO Dave Davis wrote in an email to employees: "Spirit is a critical part of the U.S. aviation industry. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. We remain hard at work on many initiatives to protect our unique franchise, our valued Team Members, our business partners and our Guests who place their trust in us every day. We appreciate your commitment and professionalism during this challenging phase and, with your help, we will transform and protect this critical business." Kerry Tan, an airline industry expert, told Newsweek: "Spirit may be signaling the beginning of the end of their operations unless they can manage a dramatic turnaround. Prospective customers should be wary of the risks when booking flights. Fortunately, there are alternative ultra low-cost carriers like Frontier and Allegiant to consider, although both of these airlines have been suffering from below average on-time performance." Volodymyr Bilotkach, a professor of aviation management at Purdue University, told Newsweek that competitors could pick up the routes left by Spirit should it go under: "We have seen this scenario playing out recently with Jetstar Asia going out of business in Singapore and Wizz Air leaving its Abu Dhabi base. Yet, given the rather diverse collection of routes Spirit currently operates; I do expect that some of the services will be lost." Jonathan Williams, a professor of economics at the University of North Carolina at Chapel Hill, told Newsweek: "[Spirit has] served an important role in the low-cost carrier space, offering a source of intense price competition for the network carriers that will be hard to replace. Smaller carriers like Breeze and Avelo don't have the assets to step into that role yet. So what happens to Spirit's assets (e.g., gates, aircraft, etc.) is very important for the ultimate impact." What Happens Next In its quarterly filing, Spirit said it would "continue to experience challenges and uncertainties in our business operations and expect these trends to continue for at least the remainder of 2025." In the email to employees, Spirit's CEO said he would be sharing more information about the airline's commercial changes "in the coming weeks."
5 days ago
- Business
What to know about the uncertain future of Spirit Airlines: 3 things that could impact travelers
Just five months after emerging from bankruptcy, Spirit Airlines is now warning investors the company may not survive without more cash. Uncertain future of Spirit Airlines Despite its financial restructuring efforts, the ultra-low budget carrier, which filed for Chapter 11 last November, is facing a turbulent future according to the aviation company's quarterly filing with the Securities and Exchange Commission, a U.S. government oversight and regulatory agency. The Florida-based budget airline has "substantial doubt" about its ability to continue or sustain operations as it has struggled to regain profitability, its parent company, Spirit Aviation Holdings, stated in the filing. "The Company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel in the second quarter of 2025, resulting in a challenging pricing environment," the filing stated. "As a result, the Company continues to experience challenges and uncertainties in its business operations and expects these trends to continue for at least the remainder of 2025." Spirit was the first major U.S. airline in 13 years to declare bankruptcy since American Airlines. Weaker demand for low-budget leisure travel has made it difficult for the no-frills carrier to price its fares appropriately, while still filling enough seats to make back profit. Per the filing, Spirit needs more cash or the airline could be at risk of potential default to creditors. The airline said it is considering options including selling off aircrafts, real estate or some airport gate spots. What it means for travelers Following the influx of attention and a stock plunge by 40% on Tuesday, Spirit's CEO and president Dave Davis addressed employees in a written memo, saying the company was "hard at work on many initiatives to protect our unique franchise, our valued Team Members, our business partners and our Guests who place their trust in us every day." In the memo, he explained that using "substantial doubt" about the company's future is "a phrase required by our outside auditors to convey that there is risk if we do not make changes. But, we are." Davis also said the airline is "confident" the company can "build a Spirit that will continue to provide customers the unmatched value that they have come to expect for many years to come." Any travelers with tickets booked on Spirit will not be impacted as there is no suggestion of an imminent shutdown.
Miami Herald
5 days ago
- Business
- Miami Herald
Spirit Airlines issues warning about its future. Will company stay in business?
Spirit Airlines on Monday warned investors and passengers that it may no longer be in business in a year even after a successful bankruptcy restructuring and recent attempts to generate new sources of revenue. The alert came in a 222-page financial statement the Broward company is required to submit every quarter to the U.S. Securities and Exchange Commission, a regulatory body. The airline described several issues it's facing on whether the company can meet all financial commitments with current cash on hand and future revenue forecasts amid tough economic conditions. '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 wrote in the financial statement dated Aug. 11. 'Going concern' is a business principle that assumes a company will stay in business for the foreseeable future, according to the Corporate Finance Institute. It indicates that 'every decision in a company is taken with the objective in mind of running the business rather than of liquidating it.' When future existence is in doubt, public companies are required to acknowledge that in financial statements. The company did not say on Monday how or whether current passengers would be affected. Spirit's concern is the latest turn in what's been a roller-coaster saga for travelers, employees and vendors that depend on the company, whose headquarters are in Dania Beach. Less than a week ago, the carrier announced two new flights from Fort Lauderdale-Hollywood International Airport, to Grand Cayman and Belize City. That came about two weeks after it announced flights between FLL and Key West for the first time. The airline was counting on the new routes injecting fresh life into the company. In July, Spirit also announced new direct flights between FLL and Macon, Georgia, and the airline has said it will have 100 peak day flights at FLL by the end of 2025. Spirit continues to be the Broward airport's top airline in terms of passenger volume. Since it came out of bankruptcy on Feb. 20, the airline has appointed a new president, Dave Davis, and sought to offer more 'premium' offerings, like extra legroom, leaving behind its low-cost roots. In Monday's 10-Q financial filing, first reported by Bloomberg and the blog View from the Wing, Spirit executives also said they'd consider selling additional assets but admitted even that may not be enough. 'If these initiatives are unsuccessful, management believes it is probable that we will be unable to comply with the minimum liquidity covenants under our debt obligations and credit card processing agreement at some point in the next 12 months,' the company said. That 'would result in an event of default.' Spirit executives said current economic conditions haven't helped. 'We have continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel in the second quarter of 2025, resulting in a challenging pricing environment.' 'As a result, we continue to experience challenges and uncertainties in our business operations and expect these trends to continue for at least the remainder of 2025.'
