The budget carriers have suffered more than the giants from a glut of flights within the United States, which has led to price-cutting. Delta, United and American have a booming business right now in long-haul international flights that can offset weak pricing power at home. Spirit does not.
The budget carriers are trying to adapt. Frontier Airlines — which, like Spirit, has been losing money for more than four years — matched a pandemic-era move by the bigger airlines and dropped flight-change and cancellation fees for many customers this spring. Spirit quickly copied the move.
Spirit has other problems, including a looming debt payment of more than $1 billion and a shortage of planes because some of its jets are grounded for inspections and repairs of Pratt & Whitney engines. Spirit expects compensation of up to $200 million from the engine maker, but its condition is dire enough that Spirit announced in April it would furlough some pilots and delay delivery of new jets.
TD Cowen analysts downgraded Spirit shares to “Sell” this month and said if Spirit can’t renegotiate its debt or return leased planes to lessors, a pre-packaged bankruptcy filing is possible.
Spirit’s announcement Tuesday targets travelers who might not consider a budget airline.
It said customers will be able to book any of the four new ticket bundles starting Aug. 16. That means they won’t be available during the height of summer-vacation travel but will be in use over the busy Labor Day holiday.
“We listened to our guests and are excited to deliver what they want: choices for an elevated experience that are affordable and provide unparalleled value,” Christie said in a statement issued by Spirit.
Spirit shares gained 5% in afternoon trading but are down more than 80% this year.
