Spirit Airlines Demise Was Unavoidable

Spirit Airlines’ demise was unavoidable and we learned why after some new numbers dropped explaining their financial situation.

Folks all over the media landscape are reacting to Spirit Airlines’ March Operating Report. There’s a ton of information in there. However, one of the biggest financial figures that has caught people’s eye is how much the company was spending just to operate.

The good people from View From the Wing did some math on the operating costs. Their results are nothing short of shocking. Spirit was spending $0.61 against every dollar earned. It would be almost impossible to come back from that kind of disparity.

Diving deeper into the March Operating Report from Spirit Airlines, you can also discover why the “Trump Administration Rescue” plot fell flat on its face. In essence, the government wanted to be paid back for their $500 million bailout before other creditors. 

Sure, it would have basically created an airline owned by the United States, but one that would have gone out of business in what a few short years? Let’s not forget the volatility in both markets and culture that the current administration has fostered. The idea was dead on arrival in multiple respects.

So, there was no real path forward for a company that’s spending $1.61 to earn back a dollar in a long-term period. Sadly, that means budget travelers are looking out on a summer season that will involve higher costs.

Spirit Airlines goes under

So obviously, Spirit Airlines is no more. But, back in the Biden Administration, there was talk of a merger with JetBlue to stave off this outcome. A lot of the armchair analysis surrounding Spirit’s demise has somehow circled that event as the beginning of the end.

A little common sense would tell us as observers that merger discussions mean that the internals were already shaky. Add that understanding to the fact that JetBlue is currently having it’s own pains in the current economy, and it becomes clear that there is no easy solution.

Sometimes, a business model that worked in a previous decade really does fall out of favor with no other replacement lined-up. A lot of the mid-sizer airlines are going through this same song and dance right now. So, we might be revisiting this story for reference with Frontier or JetBlue in a while.

One factor that certainly didn’t help

Friends, while most of the mainstream media squeaks along about how Biden’s administration is the one thing that failed Spirit Airlines, I have some news for you. There’s a factor subtly riding under the radar that you’re going to want to know about this summer.

Namely, the jet fuel price situation both here and abroad. NPR has talked about the phenomenon as people get ready for their trips. The current Iran war has sent those prices to the moon and it’s a huge reason why JetBlue is feeling the squeeze. And, they’re not alone.

Multiple different airlines have jacked up their baggage fee prices and adjusted other creature comforts to help soften the pain from the fuel prices. But, you can’t drive planes without gas. So, until this Strait of Hormuz business gets settled, you’re going to see high prices and maybe another airline closure to boot!

(featured image: TDelCoro, CC BY-SA 2.0.)

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