Note to self: Never, and I mean NEVER fly on an airline that legit has nothing to lose…

So we all know about Spirit Airlines sudden bankruptcy right? Yeah that’s old news. However, just recently, we all just got a peep show at just how bad Spirit’s clusterf**k of a business was before they filed Chapter 11. The peep show? Spirits delayed earnings. Spoiler: They are worse than the legroom on one of their flights.

In short, the numbers are about as ugly as anyone would expect if they were familiar with the atrocious airline. For the third quarter, Spirit posted a $308 million loss on $1.2 billion in revenue. Not shocking, given the airline has been hemorrhaging cash for three years straight. Year-to-date? A casual $644 million in losses. And no, this isn’t some Macy’s accounting type mix-up—in fact, they didn’t even bother to audit the results LOL.

(Source: Giphy) 

What’s more is that Spirit's basic loss per share more than doubled compared to last year, clocking in at $2.81 versus $1.44. Translation: if you thought your $50 carry-on fee was bad, imagine being a shareholder. Revenue for the quarter dropped 5% year-over-year, while operating expenses inched up 3%. You don’t need to be a CFO to know that math ain’t mathin. But hey, Spirit’s CEO Ted Christie is still optimistic: “We look forward to emerging as a stronger company.” Sure, Ted. And I look forward to never crossing “Fly Spirit” off my bucket list. 

The reason for this glorious demise is that Spirit’s bread and butter—charging you for everything from water to breathing—has taken a hit. After attempting to play nice with the big boys by scrapping change and cancellation fees, Spirit basically shot itself in the foot. These fees made up more than half of its revenue, so eliminating them was like throwing the life vest overboard mid-flight. 

(Source: MSM) 

Add in an “increasingly challenging pricing environment” (a polite way of saying they flooded the market with too many planes and too many seats), and it’s no wonder Spirit is struggling. Turns out, people don’t want to pay for an airline that feels like a Greyhound bus in the sky. (If you’ve never been on one, trust me—they are as bad on the inside as they are on the outside. In fact, I may or may not have caught an STD by just breathing the same air as everyone on that bus).

But alas, Spirit officially filed for Chapter 11 protection on November 18, which means it’s trying to restructure its debt while continuing to operate. And by “operate,” I mean desperately trying to convince customers that everything is fine. The airline ended September with just $424 million in cash—less than half of what it started the year with. 

Meanwhile, debt continues to pile up like unused in-flight drink coupons. The company is scrambling to secure fresh financing to keep the lights on and the planes flying, but management has already admitted there’s “substantial doubt” about their ability to stay afloat. Spirit insists it’s business as usual. “Guests can continue to book and fly without interruption,” the company said in a statement. I wish they were joking. 

(Source: Fast Company) 

Looking ahead though, the airline is betting big on a financial restructuring and its fleet of 217 Airbus A320-family jets to pull it out of this nosedive. But with costs rising, revenue shrinking, and no clear plan to fix its broken business model, it’s hard to see how Spirit climbs out of this. And if that wasn’t enough turbulence, market analysts are already warning about the risks of an economic downturn. Spirit’s low-cost model might work for penny-pinching travelers, but it’s not helping much when the airline itself is running on fumes.

In the end, sure, Spirit Airlines has made a name for itself as the king of ultra-low-cost carriers, but now it’s struggling to even stay in the air. With mounting losses, a shrinking cash pile, and no guarantee of additional financing, the airline’s future is as uncertain as its on-time arrivals.

(Source: Giphy)

So, will the Spirit emerge stronger as Ted Christie promises? Maybe. Or maybe they’re just handing out complimentary optimism because the peanuts are too expensive. Either way, it’s clear that Spirit’s “fly cheap, charge for everything” model is either headed for a major upgrade—or a friggin ‘crash landing. In the meantime, unless you like staring death in the face, treat yourself and fly Delta. 

As always, stay safe and stay frosty, friends! Until next time…

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Stocks.News does not hold positions in companies mentioned in the article.