Winding down is an industry term that means not only stopping operations, but liquidating assets, resolving contracts, dealing with employees, etc. So that notice is a step in the winding down process, and it would seem like one of the easier, and earlier ones.
Just a few hours ago, Spirit execs were saying everything is just fine. At noon yesterday,
Trump was saying that a bailout was still likely. (The first time I read about Trump saying that "we" were going to buy Spirit, I thought he meant him personally, or The Trump Organization. Spirit only needed about $500 million, and Trump could afford that.) That nobody wanted to buy a major airline for $500M means it was a really bad deal and not worth saving.
They were already in Chapter 11 bankruptcy, the "debtor in possession" reorganization mode. Not yet clear if they just went to Chapter 7, liquidation, but that's probably happening within days.
Still, a zero-notice shutdown is a bit much. Some people who have tickets for tomorrow probably went to bed already.
There's still the mechanics of winding down. All the planes have to be flown to suitable storage locations. With such an abrupt shutdown, they'll have mis-positioned aircraft all over their route
system.
Many planes are probably leased, so the lessor may have to arrange to take custody of the aircraft.
It's probably better if the aircraft are leased - there's some lessor with funds to take care of the job and the knowledge of how to arrange it, since a handover and move happens at the end of each aircraft lease.
Aircraft Spirit actually owns will have to be moved by a bankruptcy receiver, which is a lawyer trying to run what's left of an airline.
Most major airports charge very high parking fees. LAX charges $1000 for the first day, and that goes up to $5000 a day on day four. They're not in the storage business.
There are probably a lot of middle of the night phone calls and meetings going on right now.
> Most major airports charge very high parking fees. LAX charges $1000 for the first day, and that goes up to $5000 a day on day four.
That seems pretty cheap to me actually. A random Google search suggests that an airplane costs at least $100MM, so $5k per day is 0.005% of the airplane's value.
Scaled down proportionally to a $100k car, that's only $5 per day, and considering that many parking lots charge $5 per hour, that seems like a pretty good deal.
>The first time I read about Trump saying that "we" were going to buy Spirit, I thought he meant him personally
He views the federal government as his assets to use and not the people's, I don't blame your confusion. This philosophy at the highest seat of office is unprecedented in America.
It’s strange to see so many commenters celebrating the death of a company and the loss of so many jobs.
I flew Spirit a few times. The first time sucked because it was an emergency and I had no other option. The last few flights were great. We got the large seats up front for $75 extra. That plus parking at SJC was still cheaper than flying Southwest out of OAK.
The staff were friendly, and the gate was conveniently across from a lounge, so we had a truly great experience for those couple flights to Dallas.
It's probably the association with Trump, at least to those outside the US. Anything even remotely connected to that arsehole is, almost by definition, to be reviled. If he wanted to save it, there's probably a really good reason not to, without reading any further into the topic.
Low cost carrier. Think Ryanair. Competition from the rest of the market and bad management put them in a bad position, with the most recent war causing unsustainable fuel issues.
Other airlines may be able to double/triple their prices in the short term. Spirit's customers may simply choose to not fly.
Good. They treated their customers terribly and actions have consequences. I was double charged for a flight and they just refused to acknowledge it until I charged back, after which I assume they banned me.
This process may seem ugly, but just like biological death is necessary for an ecosystem, this sort of death/restructuring is essential for capitalist economies. Assets and capital get reallocated to better uses. It's all part of the circle of life.
Bankcruptcy and corporate death in general are important. However, the details of how that is managed can vary wildly, and not all implementations are equal.
In this case, the bankcruptcy was handled by cancelling all flights with 1 day of notice. This level of ugliness is not necessary.
Thank God human beings who spend money on these resources are left to fend for themselves. Imagine if we spent good money on a flight, and now the company winds down its operations even as we are on route to our destination. Since we are just a number, I supposed we should simply cease to exist or occupy a liminal space. Or maybe... we could be treated as a human being?
I'm guessing you misinterpreted my comment to assert that we should provide no consumer protections. That was not what I was saying. I'm talking pancakes, you're talking waffles.
How we treat capital and how we treat humans should not be connected to each other, and it's absolutely important that capital not be treated as if it were a person. Corporations are not humans, and we can not bail out investors while we let consumers flail. And we should never bail out corporations under the premise of helping humans, when direct assistance to humans would suffice.
Ideally, they should have stopped selling tickets and then stopped the flights when the sold flights were done. At least within some time frame like 1 month
I doubt many people would buy tickets for a flight with a failing airline. That said, shutting down with effectively zero notice is pretty terrible, and they will probably need to do a bunch of repositioning flights, so they could have kept the lights on for one or two more days.
Unfortunately continuing to burn money with no hope of recovery is not a popular strategy among judges and creditor's lawyers. Customers will either get refunds or join the back of the creditor line.
In addition to the human cost that others mention, the big problem is that in our current system, this doesn't lead to fresh blood coming in and being able to compete on an even footing: it leads to the giant incumbents schlorping up the pieces and becoming even bigger and stronger.
Your statement might be true in a system with healthy safeguards ands competition, but that isn't the system we have in the real world today.
Sure, for those not affected by these capitalist decisions, left stranded in the middle of nowhere, or having to look for a new job, while the owner party at their coffy houses.
While it's fair to criticize how this screwed up customers (and perhaps workers), airline shutdowns are often good things, route/airport slots gets freed for example, and airlines with better value (cost or quality wise) can take over.
I don't live in the US but spirit has been the butt of jokes for years.
Airlines are not great business. Margins are not great. Fuel is significant part of their operating costs. And if it goes up too much in too short time the whole model breaks. Less margins you have the more you will be impacted. So if you are operating at edge by default fast move in costs will destroy you.
The business model works fundamentally differently in the US and Europe due to geography. The US is big, meaning that flights are often longer, meaning that fuel is a bigger portion of the operating cost. And fuel is essentially something airlines can’t reduce the cost of compared to other operating costs where it might be possible to optimize for greater efficiency.
USA average flight length (I could only find old data, 2005): 1,110km [1] (even if we index this up based on upward trends, maybe another 150km, that doesn't seem a huge difference to me?)
> The US is big
And Europe is big too. It's actually a bit bigger than the USA by land size.
Btw, IAG is a global airline group. Only ~32% of IAGs revenue is intra-Europe and domestic. Another data point: Turkish Airlines (very long-haul focused airline) 2025 net income margin was 12.1% in 2025.
I'm not sure your explanation is sufficient. I don't see the exception in the USA? I am certainly willing to accept there are other differences and challenges in the USA, but I don't think it's been presented yet in this discussion.
And remember the original claim was "Airlines are not great business. Margins are not great"
--
EDIT: I found https://www.airportroutes.com/airlines/NKS/ which does highlight that Spirit flew lengths longer compared to Europe's average, at 1,577 km - but then using the same source for Ryanair https://www.airportroutes.com/airlines/RYR/ it's 1,456km, so again, not a huge difference. So comparing 2 seemingly very similar airlines, the European one has both managed to be profitable and not go bankrupt...
How are you counting average distances? Simply as the distance between two points in the carrier’s network, or are you looking at the lengths of each individual flight?
The source for the point I made is a Wendover video - Why Budget Airlines are Suddenly Failing
You need to look at things like average distance and median distance, do some filtering for most common destinations (example: NYC to LA, San Francisco to Miami, Denver to DC, etc), fuel costs, but also operating costs. Salaries and everything cost much more in the US than they do in Europe.
Cost Per Seat Mile is $0.07 for RyanAir and $0.12 for Spirit, not counting fuel. Spirit hovers around 80% capacity while RyanAir is around 94%.
RyanAir's niche is secondary airports while Spirit was compeating with larger airlines at places like LAX where gate costs are higher.
In 2024 to 2025 there was an engine problem that required Spirit to ground 40% of the fleet to deal with it. Meanwhile they still had to pay for those aircraft with no revenue. This caused a major hit to the financials for a carrier that already runs on thin margins.
I'm sure there's more to it, but these are the larger things I've found.
The immediate cause was rising fuel prices. The other issue sounds like it was poorly ran.
More generally, it is also a low cost carrier at a time when, after years of competing on price, airlines are seeing people willing to pay more for a better experience. All other carriers are expanding their premium options, catering to the affluent part of the K economy (for the first time ever the majority of Delta revenue came from premium cabins over main). Meanwhile, Spirit was dealing on the other side of the K who is also most impacted by increasing inflation, etc... giving Spirit zero ability to raise prices.
> Meanwhile, Spirit was dealing on the other side of the K who is also most impacted by increasing inflation, etc... giving Spirit zero ability to raise prices.
Ryanair (Europe's biggest and most profitable airline) is managing it OK [0]
What's difference about that side of the K in the USA vs Europe?
This story is about a particular airline failing (out of all the others that aren't). Do you think Spirit airline's situation is something serious I should have been keeping up with? I do drive a car and get gas, and the price increase has been modest but not alarming, in the context of the last decade.
The war in Iran was the final nail in the coffin. But they were running out of cash for the past few years. If the Iran situation was so bad by itself, we would surely see other airlines failing now.
Spirit could simply be the first of several; the effects may also be delayed. WGA isn't looking good either, for a number of reasons.
Just because it's the first doesn't mean it will be the only one. It goes without saying but apparently you need to be told that there has to a first here, after all. The war is only 2 months in. Full clarity won't come for 2-3 years. It's likely several airlines will take hits on their balance sheets from this that they won't be able to recover from, but they'll fight or go into hardcore refinance mode or get bailed out before actually going bankrupt, but this will remain the ultimate cause.
You asked if this was caused by or related to bad customer service. This was 100% caused by the increase in jet fuel prices due to the war in Iran. Obviously huge swings in jet fuel prices affect budget carriers more than, say, United or American or Lufthansa or Singapore Airlines, which have many (many) more options when jet fuel prices rise.
Many countries, including many third world countries, have regional airlines. It has nothing to do with America in particular, and the usage of that term is not an American-ism. A good non-American example is Qantas and QantasLink, the latter being a regional airline, and the Aussies refer to it as such.
That really sounds line the US is the only country in the world. Considering the world is bigger, I would call Spirit maybe regional, but not small. Ask some europeans, basically no one will know Spirit - as US people may not know e.g. Wizz.
Management is also fired in this instance. What you are probably suggesting is that management should have been fired sooner and replaced with competent ones. That is the job of the board, who is the proxy for shareholders. Since the board didn't do its job properly, their shares are also going to zero.
Again, working as intended. There should be no free lunch or bailouts for incompetent work.
The people being punished aren't the board or the management, those will fail upwards to other cushy roles.
The people being punished are the workers and the consumers.
If the board is unable to bring their house in order, the state should fire them, not let their incompetence ruin the lives of the working class.
I agree with GP that this is "capitalism working as it should", e.g. inflicting cruelty on working people while funnelling more wealth upwards. I disagree with the assessment of that being a good thing.
can't help but think of the deadweight loss to the US over lack of free market capitalism in terms of bailouts, price supports & subsidies, monopolies, etc. every day we stray further and further from this system we purport to have.
edit: do folks not think more competition would be better for consumers? i'm no stan of capitalism but surely it could be made better, sheesh.
Is this an actual question? I’ll answer it anyway: because they had nothing to do with financial market risk shenanigans and just wanted to get somewhere.
Also with secured claims. What are they secured against? That is what is the collateral defined. If it is not cash... Well they will get their claims when collateral is liquidated.
Aviation has stricter laws when it comes to customers. I don't have citations off the top of my head but it's not a normal customer-business relationship.
I am so grateful for this announcement. In a time when gas prices are high, Spirit should be the kind of capitalist example that dominates. Instead, it goes bankrupt despite the President trying to nationalize it. Thanks be to the God of money.
> Winding Down
> To our Guests: all flights have been cancelled, and customer service is no longer available
That seems quite a bit stronger than “winding down”!
Winding down is an industry term that means not only stopping operations, but liquidating assets, resolving contracts, dealing with employees, etc. So that notice is a step in the winding down process, and it would seem like one of the easier, and earlier ones.
Winding down would be a ramp down of some cancelled flights slowly but this is all flights cancelled immediately This is a shut down
Just a few hours ago, Spirit execs were saying everything is just fine. At noon yesterday, Trump was saying that a bailout was still likely. (The first time I read about Trump saying that "we" were going to buy Spirit, I thought he meant him personally, or The Trump Organization. Spirit only needed about $500 million, and Trump could afford that.) That nobody wanted to buy a major airline for $500M means it was a really bad deal and not worth saving. They were already in Chapter 11 bankruptcy, the "debtor in possession" reorganization mode. Not yet clear if they just went to Chapter 7, liquidation, but that's probably happening within days.
Still, a zero-notice shutdown is a bit much. Some people who have tickets for tomorrow probably went to bed already.
There's still the mechanics of winding down. All the planes have to be flown to suitable storage locations. With such an abrupt shutdown, they'll have mis-positioned aircraft all over their route system. Many planes are probably leased, so the lessor may have to arrange to take custody of the aircraft. It's probably better if the aircraft are leased - there's some lessor with funds to take care of the job and the knowledge of how to arrange it, since a handover and move happens at the end of each aircraft lease. Aircraft Spirit actually owns will have to be moved by a bankruptcy receiver, which is a lawyer trying to run what's left of an airline. Most major airports charge very high parking fees. LAX charges $1000 for the first day, and that goes up to $5000 a day on day four. They're not in the storage business.
There are probably a lot of middle of the night phone calls and meetings going on right now.
> Most major airports charge very high parking fees. LAX charges $1000 for the first day, and that goes up to $5000 a day on day four.
That seems pretty cheap to me actually. A random Google search suggests that an airplane costs at least $100MM, so $5k per day is 0.005% of the airplane's value.
Scaled down proportionally to a $100k car, that's only $5 per day, and considering that many parking lots charge $5 per hour, that seems like a pretty good deal.
>The first time I read about Trump saying that "we" were going to buy Spirit, I thought he meant him personally
He views the federal government as his assets to use and not the people's, I don't blame your confusion. This philosophy at the highest seat of office is unprecedented in America.
It's "orderly", don't you know!
It was a very quick wind down.
More like a free fall ffs
It's a fall down. Just like their stock prices.
It’s strange to see so many commenters celebrating the death of a company and the loss of so many jobs.
I flew Spirit a few times. The first time sucked because it was an emergency and I had no other option. The last few flights were great. We got the large seats up front for $75 extra. That plus parking at SJC was still cheaper than flying Southwest out of OAK.
The staff were friendly, and the gate was conveniently across from a lounge, so we had a truly great experience for those couple flights to Dallas.
A company that isn't a going concern should be liquidated immediately. Taxpayer money should not be sunk into something that has no future.
It's probably the association with Trump, at least to those outside the US. Anything even remotely connected to that arsehole is, almost by definition, to be reviled. If he wanted to save it, there's probably a really good reason not to, without reading any further into the topic.
Management chased every quarter with little care about the long term future.
Took their profits and ran to other low cost airlines like frontier to make them ultra low cost per friends in the industry.
Spirit tried to merge a few times but failed due to their balance sheets. Then bankruptcy protections.
Follow the price of oil and airlines run into issues during those times when it goes above $100.
Can someone explain to me (a non American) which niche or segment was Spirit in (and perhaps why they, and not any other airline, are shutting shop)?
Low cost carrier. Think Ryanair. Competition from the rest of the market and bad management put them in a bad position, with the most recent war causing unsustainable fuel issues. Other airlines may be able to double/triple their prices in the short term. Spirit's customers may simply choose to not fly.
https://www.npr.org/2026/05/02/nx-s1-5807933/spirit-airlines... describes this in more detail.
Thank you!
Similar to Ryanair in Europe
Thanks!
>thanks administration that drove them out of business with a pointless war, or at least finished them off.
Good. They treated their customers terribly and actions have consequences. I was double charged for a flight and they just refused to acknowledge it until I charged back, after which I assume they banned me.
That’s my experience of every single US airline though…
This process may seem ugly, but just like biological death is necessary for an ecosystem, this sort of death/restructuring is essential for capitalist economies. Assets and capital get reallocated to better uses. It's all part of the circle of life.
Bankcruptcy and corporate death in general are important. However, the details of how that is managed can vary wildly, and not all implementations are equal.
In this case, the bankcruptcy was handled by cancelling all flights with 1 day of notice. This level of ugliness is not necessary.
“How did you go bankrupt? Two ways. Gradually, then suddenly.” -Hemmingway
Thank God human beings who spend money on these resources are left to fend for themselves. Imagine if we spent good money on a flight, and now the company winds down its operations even as we are on route to our destination. Since we are just a number, I supposed we should simply cease to exist or occupy a liminal space. Or maybe... we could be treated as a human being?
I'm guessing you misinterpreted my comment to assert that we should provide no consumer protections. That was not what I was saying. I'm talking pancakes, you're talking waffles.
How we treat capital and how we treat humans should not be connected to each other, and it's absolutely important that capital not be treated as if it were a person. Corporations are not humans, and we can not bail out investors while we let consumers flail. And we should never bail out corporations under the premise of helping humans, when direct assistance to humans would suffice.
Ideally, they should have stopped selling tickets and then stopped the flights when the sold flights were done. At least within some time frame like 1 month
I doubt many people would buy tickets for a flight with a failing airline. That said, shutting down with effectively zero notice is pretty terrible, and they will probably need to do a bunch of repositioning flights, so they could have kept the lights on for one or two more days.
I agree with this.
I initially meant that they should have finished the flights they already sold tickets for, in some timeframe like one month.
Changed the phrasing so it is more clear.
Unfortunately continuing to burn money with no hope of recovery is not a popular strategy among judges and creditor's lawyers. Customers will either get refunds or join the back of the creditor line.
looks at ai investments
Sure.
Comment is made after May 1st, international strike day.
> biological death is necessary for an ecosystem
Can you expand on this? How do you explain e.g. ecosystems around centuries-old redwoods?
Interesting example since giant sequoias benefit greatly from forest fires...
https://en.wikipedia.org/wiki/Sequoia_sempervirens#Fire_adap...
In addition to the human cost that others mention, the big problem is that in our current system, this doesn't lead to fresh blood coming in and being able to compete on an even footing: it leads to the giant incumbents schlorping up the pieces and becoming even bigger and stronger.
Your statement might be true in a system with healthy safeguards ands competition, but that isn't the system we have in the real world today.
Sure, for those not affected by these capitalist decisions, left stranded in the middle of nowhere, or having to look for a new job, while the owner party at their coffy houses.
That sounds more like religious dogma than thought out argument.
The capital will probably go to further the AI bubble, I really don't see how that would be more useful than enabling travel.
While it's fair to criticize how this screwed up customers (and perhaps workers), airline shutdowns are often good things, route/airport slots gets freed for example, and airlines with better value (cost or quality wise) can take over.
I don't live in the US but spirit has been the butt of jokes for years.
Why did Spirit die? Was there any last of this that had to do with their abysmal customer service?
Airlines are not great business. Margins are not great. Fuel is significant part of their operating costs. And if it goes up too much in too short time the whole model breaks. Less margins you have the more you will be impacted. So if you are operating at edge by default fast move in costs will destroy you.
IAG in 2025 had a record operating margin of 15.1%.
Ryanair's gross profit margin for fiscal years ending March 2021 to 2025 averaged 19.1%.
Some are (were?) doing just fine - in Europe at least.
Sure, it's no Big Tech or banking, but it's not like the single low digit percentage of eg retail.
Perhaps some USA airlines need some advice from across the pond?
The business model works fundamentally differently in the US and Europe due to geography. The US is big, meaning that flights are often longer, meaning that fuel is a bigger portion of the operating cost. And fuel is essentially something airlines can’t reduce the cost of compared to other operating costs where it might be possible to optimize for greater efficiency.
> meaning that flights are often longer
Got any sources?
I found:
Europe average flight length (2024): 1,157km [0]
USA average flight length (I could only find old data, 2005): 1,110km [1] (even if we index this up based on upward trends, maybe another 150km, that doesn't seem a huge difference to me?)
> The US is big
And Europe is big too. It's actually a bit bigger than the USA by land size.
Btw, IAG is a global airline group. Only ~32% of IAGs revenue is intra-Europe and domestic. Another data point: Turkish Airlines (very long-haul focused airline) 2025 net income margin was 12.1% in 2025.
I'm not sure your explanation is sufficient. I don't see the exception in the USA? I am certainly willing to accept there are other differences and challenges in the USA, but I don't think it's been presented yet in this discussion.
And remember the original claim was "Airlines are not great business. Margins are not great"
--
EDIT: I found https://www.airportroutes.com/airlines/NKS/ which does highlight that Spirit flew lengths longer compared to Europe's average, at 1,577 km - but then using the same source for Ryanair https://www.airportroutes.com/airlines/RYR/ it's 1,456km, so again, not a huge difference. So comparing 2 seemingly very similar airlines, the European one has both managed to be profitable and not go bankrupt...
--
[0] https://www.eurocontrol.int/publication/eurocontrol-data-sna...
[1] https://www.hsdl.org/c/view?docid=25985
How are you counting average distances? Simply as the distance between two points in the carrier’s network, or are you looking at the lengths of each individual flight?
The source for the point I made is a Wendover video - Why Budget Airlines are Suddenly Failing
You need to look at things like average distance and median distance, do some filtering for most common destinations (example: NYC to LA, San Francisco to Miami, Denver to DC, etc), fuel costs, but also operating costs. Salaries and everything cost much more in the US than they do in Europe.
Cost Per Seat Mile is $0.07 for RyanAir and $0.12 for Spirit, not counting fuel. Spirit hovers around 80% capacity while RyanAir is around 94%.
RyanAir's niche is secondary airports while Spirit was compeating with larger airlines at places like LAX where gate costs are higher.
In 2024 to 2025 there was an engine problem that required Spirit to ground 40% of the fleet to deal with it. Meanwhile they still had to pay for those aircraft with no revenue. This caused a major hit to the financials for a carrier that already runs on thin margins.
I'm sure there's more to it, but these are the larger things I've found.
The immediate cause was rising fuel prices. The other issue sounds like it was poorly ran.
More generally, it is also a low cost carrier at a time when, after years of competing on price, airlines are seeing people willing to pay more for a better experience. All other carriers are expanding their premium options, catering to the affluent part of the K economy (for the first time ever the majority of Delta revenue came from premium cabins over main). Meanwhile, Spirit was dealing on the other side of the K who is also most impacted by increasing inflation, etc... giving Spirit zero ability to raise prices.
> Meanwhile, Spirit was dealing on the other side of the K who is also most impacted by increasing inflation, etc... giving Spirit zero ability to raise prices.
Ryanair (Europe's biggest and most profitable airline) is managing it OK [0]
What's difference about that side of the K in the USA vs Europe?
[0] https://www.bbc.co.uk/news/articles/c620506dvmjo
[flagged]
Some of us don't consume the mainstream news and don't fly.
If you didn't know about the war in Iran and the effects it has had on oil and thus jet fuel prices, I'm not sure what you're doing on HN.
This story is about a particular airline failing (out of all the others that aren't). Do you think Spirit airline's situation is something serious I should have been keeping up with? I do drive a car and get gas, and the price increase has been modest but not alarming, in the context of the last decade.
The war in Iran was the final nail in the coffin. But they were running out of cash for the past few years. If the Iran situation was so bad by itself, we would surely see other airlines failing now.
Spirit could simply be the first of several; the effects may also be delayed. WGA isn't looking good either, for a number of reasons.
Just because it's the first doesn't mean it will be the only one. It goes without saying but apparently you need to be told that there has to a first here, after all. The war is only 2 months in. Full clarity won't come for 2-3 years. It's likely several airlines will take hits on their balance sheets from this that they won't be able to recover from, but they'll fight or go into hardcore refinance mode or get bailed out before actually going bankrupt, but this will remain the ultimate cause.
Small regional airline failing isn’t a big news story in my typical parts of the internet.
No, Spirit is/was not a 'small regional'.
You asked if this was caused by or related to bad customer service. This was 100% caused by the increase in jet fuel prices due to the war in Iran. Obviously huge swings in jet fuel prices affect budget carriers more than, say, United or American or Lufthansa or Singapore Airlines, which have many (many) more options when jet fuel prices rise.
Many countries, including many third world countries, have regional airlines. It has nothing to do with America in particular, and the usage of that term is not an American-ism. A good non-American example is Qantas and QantasLink, the latter being a regional airline, and the Aussies refer to it as such.
That really sounds line the US is the only country in the world. Considering the world is bigger, I would call Spirit maybe regional, but not small. Ask some europeans, basically no one will know Spirit - as US people may not know e.g. Wizz.
Seems like the fallout of the unnecessary adventurism in middle east.
The article does not give context : it is not entirely about the price of fuel, but it seems like fuel was the last nail in the coffin...
Too bad. Capitalism working as it should and no last minute government bailouts for failing companies.
The market should decide and determines winners and losers, not the government.
So compete.
I never heard about this company before this morning, so I can't project any second order effect of this closure.
That being said, I suspect many people had never heard about Lehman Brothers before 2008...
https://en.wikipedia.org/wiki/Monopoly
Other than ideology, in what way is this a good outcome? For passengers? For workers?
Because companies that are run poorly should go out of business. Otherwise, what incentive is there for management to do a good job?
Why can't management be fired instead? Why punish the above groups for the mistakes of leadership?
Management is also fired in this instance. What you are probably suggesting is that management should have been fired sooner and replaced with competent ones. That is the job of the board, who is the proxy for shareholders. Since the board didn't do its job properly, their shares are also going to zero.
Again, working as intended. There should be no free lunch or bailouts for incompetent work.
The people being punished aren't the board or the management, those will fail upwards to other cushy roles.
The people being punished are the workers and the consumers.
If the board is unable to bring their house in order, the state should fire them, not let their incompetence ruin the lives of the working class.
I agree with GP that this is "capitalism working as it should", e.g. inflicting cruelty on working people while funnelling more wealth upwards. I disagree with the assessment of that being a good thing.
Man wouldn’t it be great if we lived in that world?
can't help but think of the deadweight loss to the US over lack of free market capitalism in terms of bailouts, price supports & subsidies, monopolies, etc. every day we stray further and further from this system we purport to have.
edit: do folks not think more competition would be better for consumers? i'm no stan of capitalism but surely it could be made better, sheesh.
Wow those Halloween shops really flopped huh?
If only they flapped. Maybe they'd still be in the air.
[flagged]
Is this an actual question? I’ll answer it anyway: because they had nothing to do with financial market risk shenanigans and just wanted to get somewhere.
[flagged]
You've just decided, all by yourself, that customers are "low priority people." Why?
The law specifies the order people get paid out for a bankruptcy.
Which law? 14 CFR Part 260 requires air carriers to refund tickets on cancelled flights.
I think the law is wrong…
[flagged]
Customers are creditors, as they have given money in credit in exchange for a service at a later date.
If a customer hasn't taken their flight yet, they are a creditor.
Being a consumer/customer is different from being a creditor
An unsecured creditor which gets paid out after secured creditors.
I’m no expert, but a bit of googling tells us.
The laws around bankruptcy define the priority of who gets paid and in what order:
- Secured Claims
- Unsecured Priority Claims
- Unsecured Non-Priority Claims (General Unsecured)
- Equity Security Interests
Each layer has to be paid in full before the next layer.
Unsecured Priority Claims - this includes customers who have paid for services.
Also with secured claims. What are they secured against? That is what is the collateral defined. If it is not cash... Well they will get their claims when collateral is liquidated.
The customers are creditors.
It is a fair question. Normally customer creditors ends up last in the line.
Aviation has stricter laws when it comes to customers. I don't have citations off the top of my head but it's not a normal customer-business relationship.
EDIT: 14 CFR Part 260.
I sense another bailout for the airline industry if the illegal Iran war continues. Spirit is just the first domino to fall.
I am so grateful for this announcement. In a time when gas prices are high, Spirit should be the kind of capitalist example that dominates. Instead, it goes bankrupt despite the President trying to nationalize it. Thanks be to the God of money.