Spirit Furloughing

scramjet said:
I’m not quite sure how they went from being so successful to where they are today. Even during 2021, they were growing and seemingly doing decently despite the pandemic. What’s the “Scramjet is too lazy to research it himself” answer for how it came to this? Did consumer preferences change that much? Previously, Spirit seemed to thrive on the well worn axiom that the post-deregulation airline industry was largely an “undifferentiated product.” Sad to see folks out of work.
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I'm too lazy to do the research too but I don't believe they've made a profit since pre-covid.
 
I am sure you could write a book on what happened, but I think everything changed after Covid. But I think at its core, People had pent up demand and pockets of cash (some govt infused) and basically had a YOLO mentality and willing to spend extra for more premium product and to go internationally where they had been blocked during Covid. Add in horrendously bad luck with GTF engines and I think you have the low orbit level view of the downturn post Covid.
 
scramjet said:
I’m not quite sure how they went from being so successful to where they are today. Even during 2021, they were growing and seemingly doing decently despite the pandemic. What’s the “Scramjet is too lazy to research it himself” answer for how it came to this? Did consumer preferences change that much? Previously, Spirit seemed to thrive on the well worn axiom that the post-deregulation airline industry was largely an “undifferentiated product.” Sad to see folks out of work.
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Management ran it into the ground. They last turned a profit in 2019 and had no answers. They paid themselves handsomely in bonuses on the way out.
 
Sad they are shutting down.


I think JetBlue dodged a bullet. That 3.8 billion all cash offer and spirits debt coming with that merger. I think it’s likely if the merger went thru that the new company would likely be having financial problems.
 
I wonder if the Spirit shareholders who pushed the JetBlue merger despite NK management’s warning that they didn’t think it would be approved feel dumb now. My guess is no because they’ve long moved onto the next thing.
 
scramjet said:
I’m not quite sure how they went from being so successful to where they are today. Even during 2021, they were growing and seemingly doing decently despite the pandemic. What’s the “Scramjet is too lazy to research it himself” answer for how it came to this? Did consumer preferences change that much? Previously, Spirit seemed to thrive on the well worn axiom that the post-deregulation airline industry was largely an “undifferentiated product.” Sad to see folks out of work.
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One big thing that did them a fair amount of damage, was the majors offering Basic Econony fares. Prior to that, Spirir could compete head to head in markets against the majors on price point alone. Once United (I think they were the first) gave passengers the option of paying prett6 much the same price but getting the entire United network and service (other than things in the plane), Spirit lost any advantage they had in that market.

Allegiant has managed to do ok still on price alone because the markets they offer don't have anybody else with "more" service but yhe same, low fares. Frontier is kind of somewhere between the two as far as exposure goes.
 
I think there’s a subtler issue in play as well.

There has been a dramatic shift in wealth and spending - recent stories I’ve seen indicate that the top 20% of households are doing 80% of the spending.

And that spending is willing to spend for a nicer product. So yes the market/consumer has shifted.
 
BobDDuck said:
One big thing that did them a fair amount of damage, was the majors offering Basic Econony fares. Prior to that, Spirir could compete head to head in markets against the majors on price point alone. Once United (I think they were the first) gave passengers the option of paying prett6 much the same price but getting the entire United network and service (other than things in the plane), Spirit lost any advantage they had in that market.

Allegiant has managed to do ok still on price alone because the markets they offer don't have anybody else with "more" service but yhe same, low fares. Frontier is kind of somewhere between the two as far as exposure goes.
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This, combined with gauge. The NK model, like the F9 one, is based on volume - getting as many seats onto the plane (and pax) as possible and then competing directly against full fare carriers to peel off some of that traffic. Basic economy gave you the same thing, but on an airline that offered multiple flights a day. The ULCCs that are doing relatively well are those that either 1) Focused on lower gauge/demand markets (Breeze) or secondary airports (Allegiant). Avelo was set up to replicate the Allegiant model (as they were all former G4 guys who started it), but Breeze found that they could beat them in their own markets with the lower per seat operating cost aircraft in the A220.

The secondary airport thing is already getting real again. I just got Breeze to enter the LNK market because I showed them how much they were going to have to tack onto each ticket to pay for OMA's $1B terminal if they chose to fly there. They can operate for less at LNK, and it turns out that 8% of their pax right now are coming in from Omaha.
 
killbilly said:
I think there’s a subtler issue in play as well.

There has been a dramatic shift in wealth and spending - recent stories I’ve seen indicate that the top 20% of households are doing 80% of the spending.

And that spending is willing to spend for a nicer product. So yes the market/consumer has shifted.
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So I've been talking about this a lot today too, and you're right. Each earnings call seems to reference the K-shaped economy like it's an aside, but it's actually really f'n important. What concerns me is how much wealth is held by boomers - their ratio of wealth to population has grown substantially over time. Right now they travel a lot - they're typically the highest share segment for most of the airports I work with behind the "Power Elite" (heavy business pax). What happens when they can no longer travel? What happens to their wealth? Does the healthcare industry eat it all up? Hard to tell, but at some point they won't be able to fly, and the generations that follow them won't have the same means to do so.

Sprinkle on top of this that fuel is probably FUBAR for at least the five years it's going to take to rebuild the stuff destroyed by both sides and ... yeah.
 
Murdoughnut said:
This, combined with gauge. The NK model, like the F9 one, is based on volume - getting as many seats onto the plane (and pax) as possible and then competing directly against full fare carriers to peel off some of that traffic. Basic economy gave you the same thing, but on an airline that offered multiple flights a day. The ULCCs that are doing relatively well are those that either 1) Focused on lower gauge/demand markets (Breeze) or secondary airports (Allegiant). Avelo was set up to replicate the Allegiant model (as they were all former G4 guys who started it), but Breeze found that they could beat them in their own markets with the lower per seat operating cost aircraft in the A220.

The secondary airport thing is already getting real again. I just got Breeze to enter the LNK market because I showed them how much they were going to have to tack onto each ticket to pay for OMA's $1B terminal if they chose to fly there. They can operate for less at LNK, and it turns out that 8% of their pax right now are coming in from Omaha.
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One of these days when I'm in RDU (that's where you are now, right?) instead of sulking in the hotel room I need to meet up with you over burgers somewhere. In the long long ago I did sales and market planning for a regional and I would love a chat over how the markets look now and the various small market dynamics as I always found them more fascinating than the large markets.
 
killbilly said:
I think there’s a subtler issue in play as well.

There has been a dramatic shift in wealth and spending - recent stories I’ve seen indicate that the top 20% of households are doing 80% of the spending.

And that spending is willing to spend for a nicer product. So yes the market/consumer has shifted.
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This definitely is sustainable and will have no long term consequences
 
Karnage said:
One of these days when I'm in RDU (that's where you are now, right?) instead of sulking in the hotel room I need to meet up with you over burgers somewhere. In the long long ago I did sales and market planning for a regional and I would love a chat over how the markets look now and the various small market dynamics as I always found them more fascinating than the large markets.
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Yes, still here, and not far from the Airport! Please do, now that I'm in consulting I don't get the regular drop ins from pilot friends that I did when I was on the airport side.
 
BobDDuck said:
One big thing that did them a fair amount of damage, was the majors offering Basic Econony fares. Prior to that, Spirir could compete head to head in markets against the majors on price point alone. Once United (I think they were the first) gave passengers the option of paying prett6 much the same price but getting the entire United network and service (other than things in the plane), Spirit lost any advantage they had in that market.

Allegiant has managed to do ok still on price alone because the markets they offer don't have anybody else with "more" service but yhe same, low fares. Frontier is kind of somewhere between the two as far as exposure goes.
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Not that it really matters, since the results are how you described it, but Delta was the first in 2012.
 
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scramjet said:
I’m not quite sure how they went from being so successful to where they are today. Even during 2021, they were growing and seemingly doing decently despite the pandemic. What’s the “Scramjet is too lazy to research it himself” answer for how it came to this? Did consumer preferences change that much? Previously, Spirit seemed to thrive on the well worn axiom that the post-deregulation airline industry was largely an “undifferentiated product.” Sad to see folks out of work.
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I’ll be honest. Since 2019 living in LA and flying LA-DTW, the cheapest one way fare I paid was $36. The highest I paid was around $170. That was the case over my 7 yrs here.

Not once did I fly Delta for the family, where the cheapest one way fare was never lower than $299. One exception was 2020 when Spirit had that $36 fare, Delta had $99.


My family going DTW/PIT to MCO typically paid around $60-99 one way.

This has all been the case for years. I don’t see how they ever made money, at least since the pandemic.
 
scramjet said:
I’m not quite sure how they went from being so successful to where they are today. Even during 2021, they were growing and seemingly doing decently despite the pandemic. What’s the “Scramjet is too lazy to research it himself” answer for how it came to this? Did consumer preferences change that much? Previously, Spirit seemed to thrive on the well worn axiom that the post-deregulation airline industry was largely an “undifferentiated product.” Sad to see folks out of work.
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The ULCC model has really struggled since Covid. I do think consumer demand has changed. There are definitely still people buying the cheapest ticket they can find online, but not enough to fill 5 airline’s seats. He’ll even WN is scrambling to change its identity to meet demand. It doesn’t help that their management team has basically been coasting since before the JetBlue merger fell through.
 
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