Bankrupt Spirit Airlines may yet get the merger it seeks.
The Dania Beach, Florida-based discounter told investors earlier in October that it is “actively engaged in discussions with a number of interested counterparties.”
In non-Wall Street speak: Spirit is talking to other companies about a potential merger or takeover.
A merger or sale of Spirit’s assets has widely been discussed as potentially the best outcome for the airline since filing for its second Chapter 11 reorganization in less than a year in August. The carrier has struggled to grow revenues faster than costs since the COVID-19 pandemic, leaving a trail of red ink in its wake.
Wall Street analysts estimate that Frontier Airlines and JetBlue Airways would be the biggest beneficiaries of Spirit disappearing from the market. Other carriers, notably Southwest Airlines, would also gain.
Spirit has made several failed attempts since 2022 to merge with Frontier and JetBlue.
The investor disclosure filed with the Securities and Exchange Commission on Oct. 14 also details Spirit’s plans if it does emerge from bankruptcy as its own airline.
First, Spirit plans more schedule cuts. The carrier estimates that it will be about 20% smaller in 2026 than it is this year. And those reductions would be on top of the cuts it has already made; Spirit seats are already forecast to drop 24% in 2025, schedule data from aviation analytics firm Cirium shows.
Spirit hopes to resume “modest growth” in 2027, and then grow at an average annual rate of around 9% thereafter.
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Second, Spirit plans to shrink its fleet to just reliable Airbus A320 and A321 planes. That means it will get rid of all of the new-technology A320neo and A321neo planes in its fleet that are plagued with Pratt & Whitney engine issues.
The carrier had 38 A320neo-family planes grounded for engine issues in September and another 20 aircraft parked ahead of sale. It has already requested court approval to return more than 100 of its 214 planes to lessors.
And third, in what may be the biggest leap for Spirit, is repositioning its brand upmarket. The investor document outlines a target to shift its bare-bones, no-frills image to one catering to a “value-seeking audience.”
Shifting Spirit’s brand upmarket in the eyes of consumers will be a challenge, given the airline’s history as being an unpopular but affordable travel option, especially where competitors can offer a better product at a similar price.
Ahmed Abdelghany, an associate dean and professor in the business school at Embry-Riddle Aeronautical University, believes that the preference of travelers in the U.S. has shifted since the late 2010s, when Spirit was a fast-growing, profitable carrier.
“Many people have experienced [ultra-low-cost carrier] service and know what it means versus the full-service carrier,” he said. That shift is benefiting full-service carriers like Delta Air Lines and United Airlines, and is driving the premiumization of airplane cabins in the U.S.
Spirit itself has upgraded its Big Front Seat into “business class,” and installed extra-legroom premium economy seats on its planes to cash in on this trend.
Overarching Spirit’s stand-alone plan is a promise to cut the costs that have climbed rapidly since the pandemic. In addition to shrinking its fleet, the airline has already issued furlough notices to hundreds of pilots and flight attendants, and slashed more than a dozen unprofitable destinations from its route map.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: thepointsguy.com
