‘Misguided narrative’: Spirit Airlines CEO lashes out at bankruptcy speculation
Don't listen to the naysayers; Spirit Airlines is here to stay.
That was the message from CEO Ted Christie on Thursday as he vociferously rejected suggestions that Spirit could be on track to file for bankruptcy and perhaps even dissolve.
"This misguided narrative has been advanced by an assortment of pundits," Christie said at the top of the airline's fourth-quarter earnings call Thursday, during which Spirit reported a loss of $184 million for the period. "However, back in the real world, we are focused on facts."
Speculation over a possible bankruptcy emerged almost immediately following a ruling by U.S. District Judge William G. Young that blocked a merger between Spirit and JetBlue.
Under the terms of the merger, JetBlue would acquire Spirit and absorb its airplanes, employees and other assets under its own brand. The airlines are appealing the decision, although JetBlue has indicated it may seek to terminate the merger agreement.
During a November antitrust trial in Boston, JetBlue argued that it needed Spirit's aircraft and crew members in order to supercharge its growth to a size that would allow it to compete with bigger U.S. carriers. Spirit said that it was in a precarious financial position and could no longer compete effectively with its particular ultra-low-cost business model.
On Thursday, however, Christie said Spirit was making changes to its business that would put it on track to return to profitability for the first time since the start of the COVID-19 pandemic.
"Liquidity is always king and we have enhanced our levels to give us the necessary flexibility to successfully close with Jet Blue or to pursue our stand-alone plans," Christie said.
Last month, Spirit completed a "sale and leaseback" of 25 aircraft, a maneuver in which it sold the airplanes to a lessor in order to raise cash and eliminate debt, and then leased them back to continue using them. The airline netted around $419 million in cash.
Over the coming months, Spirit plans to make changes to its network construction, the times of day it operates flights (peak versus off-peak), and its market and geographic concentration, Christie said.
Nevertheless, Christie said that Spirit plans to continue to aggressively appeal the decision blocking the merger.
"This case should never have been brought. It's beyond absurd for the government to claim a victory for the American consumer," Christie told investors. "In fact, it's ridiculous."
Previous mergers that the government approved have left the U.S. airline industry as an oligopoly, Christie said, with just a few larger companies at the top controlling the "vast majority of the market." American Airlines, Delta Air Lines, United Airlines and Southwest Airlines control roughly 80% of the U.S. market.
Related: Spirit saw Northeast Alliance as biggest threat to JetBlue merger, testimony reveals
"The government continues to do nothing to address the anti-competitive structure of our industry," Christie said. "Instead, they have just engaged in an expensive and long litigation process to block the merger of the sixth and seventh largest airlines that, when combined, would still be half the size of the fourth."
"Nonetheless, you can rest assured that the Spirit team is 100% clear and focused on the adjustments we are currently deploying and will continue to make throughout 2024 to drive us back to cash flow generation and profitability," Christie added.
The appeal is scheduled for June in the Boston-based 1st U.S. Circuit Court of Appeals.
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