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Spirit Airlines CEO slams ‘uninformed government’ and says airline industry is a ‘rigged game’ as company struggles to survive

Spirit Airlines CEO slams ‘uninformed government’ and says airline industry is a ‘rigged game’ as company struggles to survive

Spirit Airlines (NYSE:SAVE) was once the target of a bidding war between two of its rivals, Border group (NASDAQ:ULCC) and JetBlue Airways (NASDAQ:JBLU). Less than two years after JetBlue successfully beat Frontier in a deal that valued Spirit at $34.15 per share, Spirit’s stock price fell to less than $4 per share.

The share price drop is due in large part to the Biden administration blocking the JetBlue deal, arguing that customers who benefited from Spirit’s low fares would have been hurt by the merger.

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Ironically, customers may soon no longer have the option to fly Spirit, as the company will have more than $1 billion in debt by 2025 and 2026, compared to its now paltry market cap of less than half a billion dollars.

Spirit CEO Ted Christie is furious at the government’s “uninformed” decision, saying, “The fact that the DOJ even filed a case to block a merger between two airlines, with a combined market share of less than 8%, just shows how uninformed the government is about our dynamic aviation activities, especially in the post-COVID era.”

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Further addressing the difficulties of running a smaller airline against larger competitors, Mr. Christie explains that “almost all the profits of the entire US airline industry are concentrated in just two companies, while the smaller, non-legacy airlines efforts to restore profitability in what increasingly looks like a rigged game.”

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If Spirit is forced into bankruptcy, as some analysts predict, existing airlines will likely capture that market share with even less competition in the airline industry than before.

Helane Becker, an aviation analyst for Cowen, wrote in January that while the airline could find another buyer or spin itself off as an independent company, “a more likely scenario is a Chapter 11 filing followed by liquidation.”

While there are plenty of jokes about Spirit’s quality of service, such as charging for necessities like water, the airline was named the safest airline by WalletHub in 2024 and scores better in reliability than both JetBlue and Frontier.

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Whether the airline industry is truly a rigged game or not, it is certainly a difficult industry to be profitable in over the long term.

Legendary investor Warren Buffett famously dismissed the industry for most of his career, saying in 2007 that “if a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a great favor by taking down Orville.” to shoot.”

When he finally went against his previous advice and built a multibillion-dollar position with the big four American Airlines in 2016, it ended in sobering losses when he sold the position shortly after the start of the COVID pandemic.

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This article Spirit Airlines CEO Slams ‘Uninformed Government’, Says Airline Industry Is a ‘Rigged Game’ as Company Struggles to Survive originally appeared on Benzinga.com

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