Spirit Airlines is increasingly moving away from its past as a price-happy low-cost airline and can begin selling tickets that include a few of its hottest extras within the package.
The Florida-based airline announced Tuesday that the costliest ticket will likely be a “Go Big” package that features priority check-in, a more spacious seat, snacks and drinks, checked baggage, carry-on luggage and free Wi-Fi.
See also: Southwest Airlines begins seat task, breaking with 50-year tradition
CEO Ted Christie said the changes would “take low-cost travel to a new level,” but in addition they point to serious problems Spirit has with its long-standing business model.
The airline with the brilliant yellow planes has not made an annual profit since 2019 and has lost nearly $2.4 billion since then, leading industry analysts to query whether Spirit could have to file for bankruptcy in the long run.
Full-service carriers Delta and United generate a disproportionate share of U.S. airline profits by specializing in premium passengers and offering basic economy fares that compete with Spirit, Frontier and Allegiant for travelers on a good budget.
Low-cost airlines are attempting to adapt. Frontier Airlines – which, like Spirit, has been making losses for greater than 4 years – followed the instance of the larger airlines from the pandemic era and Flight change and cancellation fees for many shoppers this spring. Spirit quickly followed suit.
Spirit has other problems, including a looming debt payment of greater than $1 billion and a shortage of aircraft as a few of its jets are grounded for inspections and repairs to Pratt & Whitney engines. Spirit is expecting as much as $200 million in compensation from the engine manufacturer, but its situation is so dire that Spirit announced in April that it might some pilots on leave and delay the delivery of latest jets.
Analysts at TD Cowen downgraded Spirit shares to “sell” this month, saying if Spirit cannot renegotiate its debt or return leased aircraft to lessors, a bankruptcy filing is feasible.
Spirit's announcement on Tuesday is aimed toward travelers for whom a low-cost airline is probably not an option.
It said customers will have the opportunity to book all 4 recent ticket packages starting August 16. That means they won't be available throughout the peak of the summer holidays, but will likely be available over the busy Labor Day period.
“We have listened to our guests and are excited to offer them what they want: choices for an elevated experience that are affordable and offer unparalleled value,” Christie said in an announcement released by Spirit.
Spirit shares rose 5% in afternoon trading, but have fallen greater than 80% this 12 months.
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