Spirit Airlines is in HUGE TROUBLE! Here's why
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#fligavia #boeing #airbus #spiritairlines #aviation
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00:28 What happened with Spirit?
01:51 What are the reasons behind Spirit's struggles?
08:04 Future Direction for Spirit
09:29 The Common Problem of Low-cost Carriers
11:33 Conclusion
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Spirit Airlines is in HUGE TROUBLE! Here's why
You probably remember our previous episode about Southwest Airlines, a low-cost carrier that faced major challenges but was fortunate enough to avoid bankruptcy. However, not all airlines are as lucky. Spirit Airlines, a prominent name in the U.S. airline industry and also a Low-Cost Carrier, has become the first major airline in the US to file for Chapter 11 bankruptcy protection.
So, why is it on the brink of bankruptcy? How can it turn the situation around? Let’s take a closer look!
What happened with Spirit?
In 2021, the U.S. airline industry witnessed a record-breaking surge in passenger travel - a highly encouraging sign for the sector following the dark days of the pandemic. Major players like Delta and United Airlines seized this opportunity to achieve robust growth, with their stock prices soaring. However, at the opposite, Spirit Airlines - a symbol of the low-cost carrier model - faced a financial catastrophe, with its stock plunging by 90% before ultimately filing for bankruptcy.
Spirit Airlines is in HUGE TROUBLE! Here's why
Since the onset of the pandemic, Spirit has struggled to weather a series of challenges. Operating costs in the airline industry have now risen by more than 30% compared to 2019, placing immense pressure on low-cost carriers. Competitors like Delta and United benefit from a strong base of premium and business travelers who are willing to pay extra for comfort and flexibility. Spirit, on the other hand, relies heavily on price-sensitive passengers and lacks the same level of adaptability.
The situation worsened further as the airline has not recorded a profit since 2019 and has incurred losses exceeding 2 billion USD since 2020. This collapse made this airline the first major airline in the U.S. to file for Chapter 11 bankruptcy protection since American Airlines did so 13 years ago.
What are the reasons behind Spirit's struggles?
So, what caused a major airline to file for bankruptcy?
Spirit Airlines is in HUGE TROUBLE! Here's why
One of the major challenges for Spirit Airlines in recent times was the impact of the Pratt & Whitney engine recall, a serious issue that disrupted the airline's operations. This low cost carrier, with its entire fleet of Airbus aircraft, was heavily reliant on this type of engine. The problem arose when Pratt & Whitney discovered defects in some of the engines, forcing them to recall and inspect them, replacing parts to ensure flight safety. This led to dozens of Spirit's planes being temporarily grounded. For a low-cost airline that depends on maintaining a high utilization rate of its fleet to optimize revenue, the inability to operate these aircraft resulted in significant losses.
The consequences went beyond just a reduction in available flights; they significantly weakened Spirit's competitive ability. Airlines need a full fleet to meet the post-pandemic surge in passenger demand, and every grounded aircraft represents lost revenue opportunities.