Spirit Airlines Ch.11
10-09-2024, 11:24 AM
#491
It's 5 o'clock somewhere
Joined APC: Oct 2020
Posts: 2,218
Myth. Airlines do not get a piece of airport revenue. Go find that on a 10Q and post it here. Also they get no revenue from the credit cards. I believe what you are referring to is that they fly passengers who trade in miles. According to filings its about 7% of total profit. So instead of making $1.7B they make $1.8B. Take those away and the big airlines are still profitable because of a simple trick known as charging more than it costs to provide a service.
10-09-2024, 11:33 AM
#492
Almost there
Joined APC: Apr 2021
Posts: 1,320
I do not believe that merging ULCCs is going to solve any inherent problems in the business model. If scaling was going to make things better then Spirit, Jetblue and Frontier would not be deferring aircraft deliveries for 5+ years. Instead they would be trying to grow. If the business model is fundamentally flawed for how the consumers utilize air travel then merging airlines isn't the solution. American and Southwest have far more scale than merging the ULCCs would have and they are barely profitable right now. It would just create a bigger mess than it is.
This panacea of "if we just merge and become larger" won't do anything except hasten the demise of those companies. They do not have excessive overhead and Spirit's debt load is far to great to take on for the revenue of any existing ULCC to be able to service it and at the same time service their own debt.
When JB was buying Spirit we kept hearing (from pilots) "Spirit's deliveries are worth Billions" when in fact, that isn't true. Those airplanes still have to be financed and there is no arbitrage method to sell your future orders. If so, they would have been sold to another airline and not be be deferred to 2029 and beyond.
ULCCs need to pivot and they don't have a lot of time left to do it. The question is will Southwest's foray into premium seating make it even harder for ULCCs to even be competitive with a premium product considering that ULCCs costs are actually not that "ultra low" compared to pre-pandemic costs.
It seems that ULCCs are waiting for the environment to change to suit their model instead of trying to change the model. I do not believe "waiting for something to happen" has ever saved a company.
This panacea of "if we just merge and become larger" won't do anything except hasten the demise of those companies. They do not have excessive overhead and Spirit's debt load is far to great to take on for the revenue of any existing ULCC to be able to service it and at the same time service their own debt.
When JB was buying Spirit we kept hearing (from pilots) "Spirit's deliveries are worth Billions" when in fact, that isn't true. Those airplanes still have to be financed and there is no arbitrage method to sell your future orders. If so, they would have been sold to another airline and not be be deferred to 2029 and beyond.
ULCCs need to pivot and they don't have a lot of time left to do it. The question is will Southwest's foray into premium seating make it even harder for ULCCs to even be competitive with a premium product considering that ULCCs costs are actually not that "ultra low" compared to pre-pandemic costs.
It seems that ULCCs are waiting for the environment to change to suit their model instead of trying to change the model. I do not believe "waiting for something to happen" has ever saved a company.
“…combined NK/Spirit will still grow pretty fast with the current order book. I know, I know, subject to change…Lots of variables…Yada yada.
The current order book would have a possible combined size of:
2024-374
2025-397
2026-419
2027-446?
2028-464?
2029-483?
2030-503?
Question marks are at the end of 2027 and on because Spirit hasn’t published their order book past then.”
That’s still huge growth. Taking on an additional 42 airplanes when the fleet size is only 150 is a huge ask for any airline and hard to scale correctly. Instead they deferred orders (but BB didn’t mention they have extended every 8 yr lease to 12 years thus far) to make it more manageable in an overcapacity domestic market. So while the big news is that they deferred orders, the growth rate is actually the same since they are keeping 20 airplanes that were scheduled to be returned.
I would say the ULCC model has been wildly successful. So successful that the legacies copied it with more seats in the market than the ULCCs could dream of. But instead of 1 option per day on Frontier and 1 on Spirit maybe you have 9 now with 7 of those options being on a legacy. Another reason to merge.
LCCs are pushing hard to pivot already. Bundled packages, free cancelations, stretched seating….It will take time but they will get there.
10-09-2024, 11:35 AM
#493
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 40,249
The activist in charge at DOJ just wanted corporate blood on the floor, didn't care why, who, or how. I assume he fully intended to block AS/HA but couldn't come up with enough really good reasons to overcome the regime's concerns about economic optics a couple months out from Nov.
10-09-2024, 11:37 AM
#494
Almost there
Joined APC: Apr 2021
Posts: 1,320
6.8 billion in 2023. Quite a bit more than the previous poster attributed to it. They need to remath their math.
10-09-2024, 12:02 PM
#495
Gets Weekends Off
Joined APC: Mar 2023
Posts: 350
Frontier and Spirit overlap 70% of their routes... If they merged you don't have to compete with another airline for $30 fares. if they could just increase fares 15% they would be pretty dang profitable.
The counter on that would be what is a passenger willing to pay for a fare? I'm not a MBA nor try to act like it, but I think with the scale and cost synergies/effeciency's it would totally work...
The counter on that would be what is a passenger willing to pay for a fare? I'm not a MBA nor try to act like it, but I think with the scale and cost synergies/effeciency's it would totally work...
10-09-2024, 12:34 PM
#496
On Reserve
Joined APC: Feb 2024
Posts: 22
Myth. Airlines do not get a piece of airport revenue. Go find that on a 10Q and post it here. Also they get no revenue from the credit cards. I believe what you are referring to is that they fly passengers who trade in miles. According to filings its about 7% of total profit. So instead of making $1.7B they make $1.8B. Take those away and the big airlines are still profitable because of a simple trick known as charging more than it costs to provide a service.
This says otherwise on CC's and this includes finacial documents from quartely earnings
10-09-2024, 03:40 PM
#497
Gets Weekends Off
Joined APC: Sep 2020
Posts: 354
https://www.youtube.com/watch?v=29o-QsZAhAQ
This says otherwise on CC's and this includes finacial documents from quartely earnings
This says otherwise on CC's and this includes finacial documents from quartely earnings
This is absolutely misinformation. The whole video is a joke and he's stitching random uncorrelated information together to sound like he knows what he's talking about.
If you read the comments they are not only scathing but hilarious.
If this is your source of information I have some flat earth and chemtrail videos you should watch as well.
10-09-2024, 03:44 PM
#498
Gets Weekends Off
Joined APC: Jul 2023
Posts: 357
I wonder if bond holders have rejected additional financing requests and are asking for more assets including the new building as collateral for an extension of debt obligations. Spirit’s cash runway doesn’t support such a move and doing so will cause them to file for court protections next year, since they cannot dilute at this share price. I bet we see another extension as they explore their bankruptcy options. Frontier will not touch this. The only hope is a southwest offer but with their recent shakeup that won’t be anytime soon. I hope I’m wrong.
10-09-2024, 03:48 PM
#499
Gets Weekends Off
Joined APC: Sep 2020
Posts: 354
I would say the ULCC model has been wildly successful. So successful that the legacies copied it with more seats in the market than the ULCCs could dream of. But instead of 1 option per day on Frontier and 1 on Spirit maybe you have 9 now with 7 of those options being on a legacy. Another reason to merge.
Also if scale was so important, why is Spirit getting crushed as a larger airline when it was profitable as a smaller one?
No ULCC is unprofitable because its not large enough. They are unprofitable because they do not have a product most travelers want and the people that flew on them are finding that other airlines offer the same fares with more travel options, exposing that ULCC was not really a long-term viable business model, but more of a short term income opportunity.
There was a time when the ULCC model could work consistently, but that time has passed.
10-09-2024, 05:20 PM
#500
Bluediver the REAL deal
Joined APC: Jul 2022
Posts: 375
I wonder if bond holders have rejected additional financing requests and are asking for more assets including the new building as collateral for an extension of debt obligations. Spirit’s cash runway doesn’t support such a move and doing so will cause them to file for court protections next year, since they cannot dilute at this share price. I bet we see another extension as they explore their bankruptcy options. Frontier will not touch this. The only hope is a southwest offer but with their recent shakeup that won’t be anytime soon. I hope I’m wrong.
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