Chapter 1: Is Spirit Airlines officially out of business?
Allison, is Spirit Airlines dead?
Yes, Spirit Airlines is dead. It has been a long multi-year saga, but it has shut down. All flights are canceled. There is no more Spirit Airlines.
Our colleague Allison Sider covers the airline industry.
Chapter 2: What were the main factors leading to Spirit Airlines' closure?
So what was the time of death?
Its last flight was flight 1833 from Detroit to Dallas. I think it landed a little bit after midnight central time on Saturday.
And Allison, what was the cause of death?
Oh, my God. I don't even know where to start. Like you could pinpoint the cause of death at so many different points. I mean, the immediate cause of death was the rapid sustained rise in fuel prices due to the Iran war. But that's like if someone has a heart attack, but they had like years of damage, coronary damage, you know, that was just like waiting for that one moment.
It was fuel prices in the end, but it was a really long, drawn out, slow demise up until that point. Ultimately, it will leave consumers with one less choice and there will be one less airline kind of providing that competition. So, you know, ultimately, even if you hated Spirit and never flew it and it drove you crazy, like ultimately it will affect you.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, May 4th. Coming up on the show, rest in peace, Spirit Airlines. Spirit Airlines became the name in ultra-low-cost flying in 2006.
There had been budget travel in the U.S. before. You know, other airlines charged low fares. But Spirit really revolutionized this idea of, they were called an ultra-low-cost carrier, and they offered, like, really cheap flights.
On Spirit, you could get a one-way ticket for around $50, sometimes even less. And then everything else was an optional fee.
And I mean, that was like no water on the plane, you know, checked bags, carry on bags, printing out a boarding pass at the airport, like every single extra thing you wanted was going to cost you. And people kind of hated that in some ways, because obviously it's very annoying to be nickel and dimed like that.
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Chapter 3: How did Spirit Airlines revolutionize the budget airline model?
You know, I think there was a view, especially in the industry, that like, why? And for the bondholders, they hated this idea. By all accounts, they sort of really feel like they're going to be left a lot worse off, like that they might be better off just letting Spirit liquidate and they'll be able to recover some of their money by selling Spirit's assets.
So the jet fuel costs, that was the final straw. Yes, that was the final straw. But Spirit, when I've talked to Spirit's CEO, Dave Davis, he said he was really confident in the airline's plan. He really believed that they had done real significant restructuring work. They'd gotten concessions from their labor unions.
They'd cut a lot of costs out of the business, gotten rid of a lot of debt, that they were going to be able to come out and survive. And maybe then they would be in a good position to be acquired, maybe next year. And, you know, his view is that ultimately at the end of the day, it was the jet fuel cost that did them in.
On a 15-minute call last Thursday, Lutnick and Davis agreed that time had run out. So the airline pulled out a game plan that they'd been working on since last year.
After that Thursday call, that's sort of when Spirit starts implementing a plan, which is called Plan Charlie, which is their shutdown plan. And it was something they'd really never hoped to implement, but it was like, if we have to shut down the airline, how would we do it? And the wheels start being put in motion.
And it's everything from pulling parts of the website down so people can't book flights anymore to, you know, how are we going to tell employees that don't come to work tomorrow? So, you know, kind of throughout the day Friday, core teams of people are sort of putting this plan in motion and making arrangements for the airline to cease operations tomorrow. in less than 24 hours.
So even though Spirit employees haven't yet been told, their website is still up, people can still book flights if they want, but behind the scenes, they're working to get the airlines shut down.
This all happened over the weekend. What was the weekend like at airports that fly Spirit?
some of our colleagues like went out to airports we heard various things so you know customers got an email like really you know the pre-dawn hours saturday morning and they were told your flight is cancelled do not go to the airports you know all the kiosks had like a message displayed saying you know spirit has ceased operations you know thank you for for all these years there was nobody at any of their gates nobody at any of their customer service counters
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