Spirit Airlines’ sudden overnight collapse has left budget-conscious families stranded just weeks before the traditional launch of the summer travel season on Memorial Day.
Shortly after Spirit’s operational shutdown, a company lawyer apologized in bankruptcy court to Americans who are now priced out of air travel.
“We apologize most specifically to those Americans who may now be priced entirely out,” Spirit lawyer Marshall Huebner said in bankruptcy court, The Associated Press and Fortune reported, before he thanked longtime passengers who “could not otherwise have afforded air travel.”
Huebner said earlier this month that the surge in jet fuel prices left the company with “no remaining way out” of bankruptcy and caused it to cease operations last weekend, while it seeks permission to sell assets on an ongoing basis and pay bonuses to remaining employees.
OPINION: WE WILL ALL PAY FOR THE DEMOCRATS’ ANTITRUST CRUSADE THAT KILLED SPIRIT AIRLINES
Spirit Airlines announced on May 2 that it would cease operations, effective immediately, after a bailout from President Donald Trump failed to materialize. The carrier had been seeking a $500 million lifeline from the federal government, but the deal could not be finalized in time due to financial complications, the Wall Street Journal reported.
Though Spirit’s ultimate demise and bankruptcy troubles had been years in the making, the airline faced additional pressure from rising jet fuel prices after conflict involving Iran disrupted Middle East oil shipments about 11 weeks ago. Budget airlines are especially vulnerable to rising costs because they cannot easily offset fuel spikes with premium cabins, corporate travel programs or loyalty rewards, driving ticket prices further out of reach for middle-class travelers.
When the oil market volatility began, the Association of Value Airlines — representing Spirit, Allegiant Air, Avelo Air, Frontier Airlines and Sun Country Airlines — reportedly asked the Trump administration for $2.5 billion in temporary aid.
The trade group representing American Airlines, Delta, JetBlue, Southwest and Alaska Airlines quickly rejected the idea, arguing it would create an unfair advantage.
“Government intervention on behalf of those airlines would punish other airlines that have engaged in self-help in order to deal with increased costs and reward airlines who haven’t made those tough decisions,” Airlines for America wrote in a press release statement. “And, in the long-term, sustaining businesses that cannot earn their cost of capital harms competition and consumers by making it more difficult for other airlines to compete.”
“Not all airlines are struggling equally,” Barron’s associate editor Jack Hough said on Barron’s Roundtable last week. “Delta and United are the strongest. They could each generate maybe around $2 billion in free cash this year, but JetBlue and Frontier, they are burning cash right now as they have for years. And of course, Spirit Airlines has folded, so it takes away a lot of the price competition for major carriers.”
“I think it suggests that cheap flights are going to be harder to come by for a while,” Hough warned.
READ MORE FROM FOX BUSINESS
FOX Business’ Matthew Kazin, Eric Revell and Sophia Compton contributed to this report.
Read the full article here
