Spirit Braces for Potential Bankruptcy
Spirit Airlines creditors are preparing themselves for a possible Chapter 11 filing by the carrier after the creditors failed to pay their $14.99 bankruptcy-avoidance fee en masse this week following news that a potential second attempt at a merger with Frontier is not going to happen.
The carrier submitted a filing to the SEC that it does not intend to release its Q3 earnings due to ongoing discussions with its creditors — but it did say its operating margin was down about 12% for the quarter YoY, with operating revenues taking a $61 million hit. Spirit announced last month that it will sell 23 aircraft which will garner it about $500 million, plus it will cut some jobs to add in another $80 million in annual savings, but it seems to be quickly learning that you can’t save or cut yourself to profitability — eventually revenues have to go up.
Spirit stock took a bath Wednesday following the Tuesday night announcement, dropping below $2 per share to as low as $1.15 before rebounding slightly later in the week.
Your Airline May Not Know Where Your Bag is, but Apple Does
Here’s one of those things that makes so much sense, it almost seems too good to be true. Apple, as is its benevolent choice to do so, is going to partner with 15 worldwide carriers — with more to come — to use the ‘Find My’ app to locate lost luggage that’s been equipped with AirTags.
The new feature will allow passengers to share a secure link with the carrier that shares the current location of the lost items, and it will be compatible with the airline’s mishandled baggage processes. Previously, passengers had the knowledge on their phone of the exact location of their bags but did not have the ability to do anything about it other than pray for a speedy reunion.
Airlines to take part in the program include Delta and United domestically, plus BA, Lufthansa, Qantas, and Virgin Atlantic. Southwest declined to participate due to its “bags fly free” policy, saying through a spokesperson “you didn’t pay for it, so we feel no obligation to get your bag to your final destination.” Spirit agreed to participate at a per segment cost of $13.99 per AirTag and is reportedly in final negotiations with Apple as of press time. Meanwhile, American just shrugged and said “that seems like extra work.”
Gunfire Leads to Suspension of U.S. – Haiti Flights
All three major U.S. carriers that serve Haiti and its capital Port-au-Prince will suspend service for at least 30 days after the FAA banned service to the country after at least one and likely more flights were hit by stray gunfire while on approach at PAP’s Toussaint Louverture International Airport.
Spirit Flight 951 was hit by gunfire on landing and a flight attendant was injured in the incident before the plane diverted to neighboring Santiago (STI) in the Dominican Republic. Two other flights to PAP were diverted Monday as a precaution, including American 819 from Miami and JetBlue 935 from New York/JFK. Both carriers reported a post-flight inspection showed exterior damage from a bullet but no issues were reported during flight.
PAP will be closed through Monday to give the situation a chance to potentially calm down. The U.S. Embassy in Haiti said that the violence had forced a “temporary pause in operations” at the airport and implied that gangs were responsible. The embassy further stated the federal government cannot guarantee safety in the country and that any travel there is “at your own risk,” putting the airports in the country at the same level of concern as Newark.
Southwest Offers Voluntary Buyouts
Southwest Airlines is making voluntary buyouts and extended leaves of absence available to a limited number of employees at its Dallas headquarters plus to ground staff at 18 airports where the carrier is reducing capacity.
The carrier is shifting the blame squarely on Boeing, saying that delayed plane deliveries are forcing it to reduce its operation and capacity. Southwest originally expected to take delivery of as many as 85 B737-8s this year, but now expects to receive as few as 20.
No flight staff — pilots or FAs — are part of the buyout offers at this time. The airport staff affected include those in Atlanta — which definitely was due to Boeing and had nothing to do with Southwest slashing its schedule and moving flights to Nashville — Baltimore, Cleveland, Dallas/Fort Worth, Detroit, Los Angeles, Miami, and others. Southwest currently has about 73,500 employees on its books, and is hoping to see that number drift below 73,000 by the end of next month.
What’s in a Name? Just Ask OAK…or uh, Us
The saga over the name of both the Cranky Weekly Review and the airport in the East Bay located literally right next to San Francisco Bay took another turn this week when U.S. Magistrate Judge Thomas S. Hixson granted San Francisco’s motion for a preliminary injunction against the Port of Oakland’s use of San Francisco Bay in the name of its airport.
The court agreed — for now — that it’s possible the name will cause irreparable harm to San Francisco and that the Port of Oakland violated the city of San Francisco’s trademark for SFO. The decision also means that OAK and the Port can no longer use San Francisco Bay in any promotions or products either.
The real winner in this case? Likely will be the lawyers, whose fees will only go up as this case is dragged through the court system. San Francisco City Attorney David Chiu called the ruling “an important win for tourists and consumers and visitors who use our airport system,” while Port of Oakland spokesperson Robert Bernardo said it was reviewing the ruling and “considering all available options.” Stay tuned to the Cranky Weekly Review presented by Oakland International Airport Temporarily Injuncted from Calling Itself San Francisco Bay Oakland International Airport for more on this story.
- Aegean saw its profits slip.
- Air Arabia had a strong Q3.
- Air Astana has finally launched nonstop service to Phu Quoc.
- Air New Zealand‘s JV with Cathay Pacific will be around for five more years.
- Alaska‘s new ticketing lobby is opening soon in Seattle, and we all will sleep better knowing it. The airline also announced a heap of promotions.
- Azul is feeling anything but blue about its finances.
- BermudAir is adding three new U.S. destinations: Charleston, Hartford, and Raleigh-Durham. All three will launch in April.
- Cathay Pacific is offering one of those weird things that some people will participate in and it’s a little strange
- Delta, now that it’s solved all its other problems with its pending cabin refresh, is now tackling its second-most important issue: a new wine list.
- Flair is gonna get you where you’re going on time. It guarantees it.
- Icelandair will begin serving Istanbul in September.
- ITA‘s sale to Lufthansa is expected to go through after the Italian government and LH settled their dispute over €10 million.
- JAL is going ape over its new livery.
- Jet2 is beginning service from London/Luton to 17 destinations, beginning next summer.
- KLM is adding service to what is known as the three musketeers of world cities: Georgetown (Guyana), Hyderabad, and San Diego.
- Lufthansa competed a sale and leaseback of nine of Eurowings A320 and 321neos.
- Oman Air will have to wait until next year to get the password to enter oneworld’s treehouse.
- Turkish is adding six A321neos on lease.
- Vietnam Airways is on the lookout for 50 new aircraft.
Singing in the shower is all fun and games until you get shampoo in your mouth.
Then it’s a soap opera.
12 comments on “Cranky Weekly Review Presented by OAK: Spirit Reaches a Crossroads, Apple Knows Where Your Lost Bag Is”
Thank you for a virtual energy infusion on Friday!
> Stay tuned to the Cranky Weekly Review presented by Oakland International Airport Temporarily Injuncted from Calling Itself San Francisco Bay Oakland International Airport for more on this story.
That’s really funny. The fact that you intentionally used “injunct” as a verb adds even more punch (not a lawyer, don’t care, and not trying to play semantics games, but the word “enjoin” seems to be more common in situations like that).
On the bright side for OAK, this will only get them more publicity.
There will always be the Streisand Effect. . . https://en.wikipedia.org/wiki/Streisand_effect
The construction situation at SEA is horrible right now, so I’m glad to see at least the lobby part will be improving. Now if only they can do something about rental car bus lines that are often 600 people (not exaggerating) deep and well over an hour long.
Also, I had to laugh about Alaska’s representative touting their new “bridge bag drop” in the article. EVERY SINGLE TIME I’ve flown Alaska out of SEA over the past few weeks the EVERY SINGLE ONE of the “bridge bag drop” lanes has been closed.
The way you have handled the whole “what should we call OAK” debacle is legendary. I’m still giggling.
How can any airline that values the lives of their employees send an aircraft into Haiti given the current situation there? If I were running an airline I would have pulled the plug on Haiti a long time ago!
On the OAK name issue, it looks like it boils down to the court finding that it could extend San Francisco’s trademark for “San Francisco International Airport” to include use of the term “San Francisco Bay”, even though the word “Bay” is not in the current trademark and OAK argued that “San Francisco Bay” was a fair-use geographical description. The court also emphasized SFO’s reputation as a “premier airport” and that allowing OAK to use the trademark would damage SFO’s brand. The judge also (strangely, IMO) argued that OAK having a trademark on “Oakland International Airport” should preclude them from adopting a new brand, even though organizations rebrand all the time.
One attorney reviewing the case said that he believes OAK has a decent chance of prevailing on appeal, although the attorney who said that also said that he thought the ruling got to the right result, even if the logic used was “circuitous”.
I’m having trouble getting an URL I can cut/paste, but just search under “Wolters Kluwer Oakland Airport Name Change” and it should come up.
Should OAK appeal? Depends on whether they believe that on appeal they can successfully argue “Bay” and “Oakland” between “San Francisco” and “International Airport” is enough to differentiate it from SFO’s trademark. I’d guess that to change their name and still get around the trademark, they’re going to have to go with something that starts with “Oakland”, like “Oakland International Airport – San Francisco Bay”. Moving the geographic description to come after “Oakland” sould be enough to make it fair use. (There’s precedent for this: “Melbourne Orlando International Airport”.)
Finally, if OAK does decide to appeal, they should apply for a change in venue – even though it’s Federal, having a trial over the use of the words “San Francisco” in San Francisco really opens the door to bias – it’s not a state secret that San Franciscans (and Marinites and people on the Peninsula) look down on Oakland and the East Bay in general. The judge’s description of SFO as a “premier airport” makes that look even more possible.
The Spirit bankruptcy seems inevitable now, it’ll be interesting to see if shedding more expense lets them get to an operational profit. Unless they can come up with a way to raise revenue, though, it may just be delaying the end and depressing fares for everyone else in the meantime.
It’s interesting that Vietnam Airways could get a bid from COMAC on the narrowbody order, although I suspect they would want COMAC to give more than vague assurances about the planned production expansion – COMAC has an order book of 973 C919s, although I suspect a lot of those are not real, and their 2025 production is projected to be…11 planes. Without a rapid scaleup of production, or COMAC basically giving the planes away, they might as well wait for Boeing or (as I suspect who they really want to go with) Airbus.
And as always, the snark is on point!
@Cranky Do you expect Spirit to continue as a going entity and renegotiate its debt position with creditors (maybe come out of this more stable financially), or do you expect Spirit to be liquidated?
Brian – Funny, that’s what my Monday post touches on…
The funniest comment this week was calling B6 a “major carrier”.