Spirt Airlines Faces Liquidation
Bloomberg reports Spirit Airlines at Risk of Liquidation as Fuel Costs Bite
Spirit Aviation Holdings Inc. is at risk of being liquidated as rising jet fuel prices spurred by the US war with Iran further squeeze the bankrupt budget carrier’s finances, according to people familiar with the matter.
Any decision by the company to potentially liquidate could come as soon as this week, said the people, who asked not to be named because the discussions are private. The situation is fluid as Spirit engages in ongoing talks with its creditors, and its plans could still change, they added.
Spirit’s past attempts to merge with other carriers haven’t panned out. Before filing its first bankruptcy, the carrier agreed to be acquired by JetBlue Airways Corp. (JBLU), but a federal judge blocked the tie-up in 2024 on antitrust grounds.
Airlines broadly are grappling with higher jet fuel prices due to the US-Iran war and the effective closure of the Strait of Hormuz, a key passageway for oil. The conflict has brought the possibility of major shakeups in the aviation industry to the fore. United Airlines Holdings Inc. (UAL) Chief Executive Officer Scott Kirby has even pitched a possible tie-up with American Airlines Group Inc. (AAL) to President Donald Trump, though the considerations predate the start of the war.
A Dual Effort
Flashback January 16, 2024 Federal Judge Blocks JetBlue’s $3.8 Billion Acquisition of Spirit Airlines
A federal judge on Tuesday blocked JetBlue Airways’ JBLU $3.8 billion deal to buy Spirit Airlines, rejecting a merger that he said would hamper competition and lead to higher fares.
The ruling thwarts what would have been the biggest U.S. airline merger in over a decade. It marks a victory for the U.S. Department of Justice, which sued last year to prevent JetBlue and Spirit from going ahead with their tie-up.
Young agreed with the Justice Department, which had argued that the acquisition would remove an ultra-low-cost carrier that puts pressure on other airlines to keep down fares.
“The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” he wrote.
The Justice Department under the Biden administration has taken a tougher stand on consolidation, and airlines have been a particular flashpoint, as officials have grown more concerned that a series of mergers in the past two decades has diminished competition.
That’s the Spirit!
Since this is a DOJ victory it’s time to celebrate.
Biden landed the first punch and then Trump then delivered the knockout blow.
Biden’s move was done in the name of preserving competition.
That brilliant idea means there’s one less airline now.
Everyone involved can take a bow.
Meanwhile the strait that Trump proclaimed open, sure isn’t.
For discussion, please see Iran Denies the Strait is Open. No Surprise, Trump Lied About a Deal
Trump is much better at manipulating futures than negotiating deals.
Expect more stress over diesel, gasoline, jet fuel, fertilizer, and aluminum as long as the strait remains closed.
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