➡ Spirit Airlines, currently under bankruptcy protection, assures customers that flights will continue as usual while they restructure their business for profitability. Despite JetBlue’s interest in buying Spirit, this doesn’t guarantee Spirit’s survival as often, companies absorb the assets and lay off staff. It’s not unusual for airlines to file for bankruptcy, and this situation has caused Spirit’s stock prices to plummet.

But I have been talking about this for a little while now because I was actually, I had covered a lot of all of these people on Patreon, so we go through and we look at different industries, hospitality, airline industry, all of that, absolutely a no-no. But I have said a while ago on a previous livestream that Spirit and First Spirit, then probably Next Frontier, was going to be going out of business. So Spirit Airlines filed for bankruptcy for the second time this year. But the second time this year, Spirit Airlines has filed for bankruptcy, okay? I don’t like it a lot.

Why is this so loud in there? I don’t make sense to me. Give me a second. Let me make a quick adjustment. I might have to have this fixed or whatever. But anyway, Spirit Airlines has filed for bankruptcy. Make sure I hit a like for the algorithm. Subscribe to the channel and turn on your notifications. I am going to share my screen with you guys and we are going to go over this and I’m going to break down why you never, ever, ever, in a general sense, never, ever, ever, ever, ever, ever, ever, ever invest in an airline, okay? All right, so let’s deep dive.

So Spirit Airlines filed for Chapter 11 bankruptcy protection for the second time in a year. Kay Cooper says, how do you file twice in a year? Well, I’m going to break that down for you. Well, let me just give you the game right now. Let me tell you how you file for bankruptcy twice in a year. The first time that Spirit filed for bankruptcy, and I’ll go through that in this article, filed for bankruptcy protection for the second time in a year, just months after the country’s largest budget carrier failed to find sturdy financial footing when it came out of Chapter 11 protection.

In March, Spirit debt holders agreed in the airline’s previous bankruptcy to exchange $795 million in debt for equity, but the carrier avoided bigger changes to cut costs like getting rid of planes or more dramatically shrieking his footprint. So that is the key, right? And their first bankruptcy that they filed in December and then they emerged in March of this year. And this is one of the reasons I went over this previously, but in their first bankruptcy, in order for them to basically restructure because they have what they listed as their assets on record, and I think it’s here somewhere in this, is $1 billion to $10 billion in their assets.

I’m not sure what that is, but they listed $1 billion to $10 billion in assets. They got $795 million in debt, and they exchanged that for equity. So here’s the problem. Spirit, they never changed the way that they operate from a business perspective. They flew the same routes. They got the same customer service. It’s the same costs. They got the same people working there, and they are competing against a much more competitive industry because not only, not only, right? Not only do you have headwinds when it comes to tourism and people pull back when they start to experience some kind of financial problem, but you also have places like Vegas, they say, and different places.

You also have tourism declines, supposedly, but also on top of that, you got other airline carriers that’s becoming more competitive. So if you’ve ever taken a Spirit flight or if you’ve ever even looked up a Spirit flight, you know that they’re not always the cheapest because the minute that you start to look at, let me go to flights. The minute that you start to add in the stuff that you would normally do, like luggage, like carry-ons, like all of that stuff, it starts to change, right? You start to change your costs. It starts to be parity with other airlines.

So let’s say we want to go from, let’s go Maine. I guess we can’t go premium. Let’s say we want to go to, where we want to go, y’all? Miami? Can’t you make it flexible? I thought you could make it flexible on this. Let’s go to Miami on some cheap prices. I don’t remember the last time I paid them prices. Let’s fly on a Wednesday on the 24th and let’s come back on Sunday. Spirit is the cheapest, right? As usual. But look at the weird-ass flight that you got to catch. You got to catch a 6-35 AM flight, which means that you got to be to the airport, probably sometime around 5 o’clock, 4.45 in the morning, and you get a nonstop flight with no bags at $118.

But if you want to go with an American Airlines or a Delta, you can go up to $198, which you know that it’s going to be people trying to save that $70. They’re trying to save that $70, but you can catch an 830 AM flight on Delta and it’s for $70 more. Now, remember, this is round trip. That’s $35 one way and $35 the other way. And this is assuming that you don’t have any bags. Now, if you decide to have bags, like it says right here, there’s additional fees for carry-on bags and additional fees for checked bags, which means that once you throw a bag on one way and once you throw a bag on the other way, even if it’s a carry-on, you’re now over what you would have paid on Delta to have a carry-on.

What’s the cost of carry-on a bag for Spirit? Let’s see. Cost to carry Spirit. One way. So the cost to carry on a bag at Spirit ranges from $40 to $65 or more. $40 to $65 for carry-on bags and people be in there trying to stuff, stuff, stuff. So let’s just throw it at $50 to $55, one way. So now, what you’ve basically experienced as you went in there trying to save money, trying to be cheap, and now you actually are paying more just to have a carry-on bag. So if you’re just catching a quick flight or something, I’m not telling you that you shouldn’t try to save your $35 one way and then $35 the other way and then you pick a weird time in order for you to fly.

For most people, they just paid an extra $70. They had a carry-on bag and then they’re going and they’re chilling. You know what I’m saying? It ain’t even that big of a deal. When you get to the Delta counter, they’re probably going to make an announcement. Hey, it’s a full plane. So everybody, we need volunteers to check your bag, to check your luggage or whatever, so on and so forth. So basically, you’re operating at the same cost as everybody else. And this is what I’m saying. You’re not going to probably get the exact same. I’ve known people that flew one way and, you know, flew a round trip flight and then they wind up spending more than what you would have spent to actually just get a regular flight from a regular carrier.

Neither here nor there, right? But just in a general sense, I didn’t even know flights was that cheap. $200 a round trip? That’s crazy out here in these streets. Anyways, but instead of them changing the way that they do business, looking at the different flights, looking at the data, making sure that they change the way that you travel to and from, maybe canceling some routes because they’re not as busy, they’re not as popular. They instead decide to basically exchange the debt for equity. So what the debt holders agreed to would say, okay, so we’re going to take some more partial ownership in Spirit Airlines in order to wipe out the debt.

So we still want to get our money on that end, but instead of us getting it on this end for the debt holder because you paid us and you want to pay us back the interest, we just going to make sure that we get equity into the company. And so that’s what Spirit decided to do. They never changed the way that they operate. They never changed their customer service. They never canceled routes. They never made sure that they was getting the most. They never made sure that they rebranded so that they can be more competitive with other airlines.

They just kept operating like business as usual and they expected in order to survive. Never was going to survive. Anyway, Spirit says it will now, they didn’t do it the first reorganization now, when the second reorganization is now going to reduce its network and shrink its fleet, cuts that it said will reduce costs by hundreds of millions of dollars. Translation, they’re going to cancel routes that’s not as popular. They’re going to lay some people off. Pilots, customer service, agents, all of that stuff, stewardess, whatever. They’re going to be laying people off and then they’re going to sell some planes in order to raise some funding.

That’s what that means. Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, so they were just basically trying to raise money and solve for their debt. It has become clear that there is so much more work to be done and many more tools that are available to best position Spirit for the future, says Spirit CEO Dave Davis. In his filings, Spirit listed its assets and liabilities between $1 billion and $10 billion. The carrier sought to reassure customers that they can continue to book and fly on Spirit after its bankruptcy filings.

So you guys can still go and fly Spirit. You can still get your flights. If you got a flight that’s booked to the Dominican Republic because you’re trying to bust it down for a real one, you’re more than welcome to do that. They’re still going to fly a flight. They’re in bankruptcy protection, which basically means that it’s not like they’re going to fold or collapse the company right away. They’re trying to restructure and say, hey, we are a viable business. We’ve already restructured our debt. We’re going to actually come together with a better business plan to be profitable.

And so all of my bonnet queens that is flying to Miami to make sure that they get their LIFO and to get their BBLs, you still got a way to get there as cheap as possible. You still got a way to get there as cheap as possible. JetBlue wants to buy Spirit. The Biden administration blocked it. Well, let’s talk about that. JetBlue wanting to buy Spirit. Here’s the thing. JetBlue wanting to buy Spirit don’t necessarily mean that they’re going to keep Spirit open. A lot of times what happens when they buy these platforms or when they buy these plane companies, what they do is they have synergy.

So what synergy is, is they take their customer service, their desk agents, their pilots or whatever, and then they get rid of and they lay off a bunch of people and then they just absorb their planes or they absorb their assets. And a lot of times what they’ll do is they’ll re-spin that off into a different company and they’ll get rid of their debt onto that company. That happens more often than you realize. Frontier was trying to merge with Spirit. JetBlue was trying to buy Spirit. And so it’s not necessarily going to translate into a better experience.

I think that a lot of these companies are going to start to go away. And it’s not even uncommon for airline companies to file for bankruptcy. That’s pretty normal. And so you don’t want to be involved in it. Spirit’s stock prices absolutely collapse in the after hours. I’m pretty sure somebody got rich by shorting the stock. I think Frontier is going to suffer. I think all of that stuff is going to suffer. [tr:trw].

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