Yahoo Finance Spirit Airlines CEO Slams "Uninformed Government," Says Airline Industry Is A "Rigged Game" As The Company Struggles To Survive
Spirit Airlines (NYSE:SAVE) was once the target of a hot bidding war between two of its rivals, Frontier Group (NASDAQ:ULCC) and JetBlue Airways (NASDAQ:JBLU). Less than two years after JetBlue successfully beat out Frontier with a deal valuing Spirit at $34.15 per share, Spirit's stock nose-dived to under $4 per share.
The fall in share price is in large part due to the Biden administration blocking the JetBlue deal, arguing that customers benefiting from Spirit’s low fares would have been hurt by the merger.
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Ironically, customers may very well soon not have the option to fly Spirit, as the company has over $1 billion of debt due in 2025 and 2026, compared to its now meager less than half a billion dollar market cap.
The situation has Spirit's CEO, Ted Christie, fuming at the government's "uninformed" decision, saying, "The fact that the DOJ even brought a case to block a merger between two carriers, with less than 8% combined market share just shows how uninformed the government is about our dynamic airline business, particularly in the post-COVID era."
Further elaborating on the difficulties of running a smaller airline against larger competitors, Mr. Christie explains that "nearly all the profits of the entire U.S. airline industry are concentrated in just two companies, while the smaller non-legacy carriers scrambled to restore profitability in what seems ever more like a rigged game."
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If Spirit ends up forced to declare bankruptcy, as some analysts predict, the existing airlines will likely scoop up that market share with even less competition in the airline industry than before.
Helane Becker, an airline analyst for Cowen, wrote in January that while the airline could find another buyer or turn itself around as an independent company, "a more likely scenario is a Chapter 11 filing, followed by a liquidation."
While jokes about Spirit's quality of service are abundant, such as them charging for necessities like water, the airline was ranked the safest airline in 2024 by WalletHub, and scores better in reliability than both JetBlue and Frontier.
Whether the airline industry is truly a rigged game or not, it's certainly a tough industry to be profitable in over the long term.
Legendary investor Warren Buffett has famously dismissed the industry for most of his career, saying in 2007 that "if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."
When he finally went against his previous advice, accumulating a multibillion position in the big four American Airlines in 2016, it ended in sobering losses as he sold out of the position shortly after the COVID pandemic started.
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This article Spirit Airlines CEO Slams "Uninformed Government," Says Airline Industry Is A "Rigged Game" As The Company Struggles To Survive originally appeared on Benzinga.com
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