Spirit Airlines’ Future in Doubt: What This Means for Budget Travel
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Spirit Airlines’ Future in Doubt: What This Means for Budget Travel
Spirit Airlines posted a $245.8 million net loss last quarter. The company is on the brink of defaulting on its debt. Without a significant injection of capital, the airline could go out of business. The death of this budget-friendly airline could have a significant adverse ripple effect across the industry and the economy as a whole. If you don’t fly Spirit, you could expect flying to cost more across the board. But it’s possible to get a good deal on a good flight for your next adventure no matter what happens to the company’s financial situation. It’s also possible to book at the last minute to avoid having empty seats on your flight. You can also use price tracking tools like Google Flights, which can mean a big difference in ticket price in nearby airports. The airline is taking steps to improve its finances, but we’ll have to wait and see if the airline’s efforts pay off at this point. It is unclear if a merger with another airline would likely have the same effect, after the failed joining of Spirit and JetBlue under the Biden administration.
Here’s a breakdown the numbers, the potential impact to budget travel, and tips to save on airfare no matter what happens. That way, you can keep jet setting and sticking to your travel budget.
How much trouble is Spirit Airlines in?
(Image credit: Kevin Carter / Contributor)
The 2024 Spirit Airlines bankruptcy made the company’s financial woes painfully obvious. Now, Spirit is working through a post-bankruptcy restructuring plan. However, after posting a $245.8 million net loss last quarter, the company is on the brink of defaulting on its debt.
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This lack of cash flow has caused “substantial doubt” about Spirit’s future. Without a significant injection of capital, the airline could go out of business.
The company’s tenuous financial position is already impacting airline employees and travelers. Pilots are being furloughed. Flight attendants are being advised to assess and shore up their finances in case their routes get reduced or canceled.
Spirit has also begun to pull back in select markets, including Los Angeles, Las Vegas and Dallas-Fort Worth.
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What a Spirit Airlines shutdown could mean for travelers
So, what happens if Spirit Airlines becomes defunct? For starters, you’d no longer be able to take advantage of the company’s cost-conscious fares.
Even if you don’t fly Spirit, you could expect flying to cost more across the board. Fewer airlines in the market mean less competition, resulting in higher prices. Spirit’s existence in the industry forces other airlines to offer discounted seats. When the company enters a new market, competitors lower their fares significantly.
But with Spirit gone, that pressure goes away. We’re already seeing fare hikes in markets that Spirit has withdrawn from. Additionally, the remaining airlines may reduce the number of basic economy seats on their flights, thereby increasing the average ticket price.
Industry experts warn that a merger with another airline would likely have the same effect. However, after the failed joining of Spirit and JetBlue under the Biden administration, it’s unclear if a merger would be an option.
If airfare increases as expected, what would that mean for travel and tourism in general? Many people may get priced out of flying, limiting their travel options. Family-friendly destinations may experience a decline in visitors, potentially resulting in layoffs. The death of this budget-friendly airline could have a significant adverse ripple effect across the industry and the economy as a whole.
Why you shouldn’t panic about a potential Spirit Airlines shutdown
While things are looking pretty grim for Spirit, their demise isn’t written in stone. Auditors required the airline to use the phrase “substantial doubt” in their recent SEC filing, but that substantial doubt only comes into play if the company stays on the same course.
The CEO assured investors and the public that the airline is taking steps to improve its finances. For instance, Spirit is:
Planning to sell planes, real estate and airport gates to raise funds
Adding strategic new routes, such as Newark, NJ to Savannah, GA and Ft. Lauderdale, FL to Belize to serve travelers in higher-demand areas
Installing extra legroom seats in their aircraft and implementing a new dress code to attract higher-paying customers
At this point, we’ll have to wait and see if the airline’s efforts pay off.
Ways to save money on air travel
If Spirit Airlines is your go-to for booking flights, you may be more concerned than most about the company’s current precarious position. Fortunately, it’s possible to get a good deal on travel for your next adventure, no matter which airline you use.
Here are some strategies to consider:
Book at the last minute. Airlines may be willing to offer discounts soon before takeoff to avoid having empty seats.
Be flexible with your travel dates or destination (if possible). Modifying your itinerary by a few days or flying into another nearby airport could mean a big difference in ticket price.
Use price tracking tools, like Google Flights. You can also use it to set up price alerts.
Use travel rewards credit card points or miles. If you’ve banked enough rewards, you may be able to take a free vacation.