In the past, we’ve seen airlines seemingly shut down out of nowhere. Spirit was not that airline. After years of declining fortunes, the airline went through two bankruptcy stints and a near-herculean effort by its management team to save the airline. In the end, the pioneer of the ultra low cost model in the US just didn’t have a chance, and it shut down in the early morning hours of May 2. Spirit was just one month shy of its 34th birthday. It is survived by 8,000-or-so employees who stayed until the bitter end. We can all only hope for a soft landing for them at a new airline.
Spirit’s early days were fairly unremarkable. It was originally a charter operator known as Charter One, but in 1992 that airline became Spirit and launched its first scheduled flights from Detroit to Atlantic City. This was a Detroit-based airline in a way similar to how Sun Country was a Minneapolis-based airline. But that model did not last.
This was a company flying old DC-9s and MD-80s on a broad network that focused on second-tier leisure markets. In 1998, Detroit was the airline’s largest operation followed by Atlantic City and Myrtle Beach. But soon, Fort Lauderdale started to rise in the airline’s network. Spirit moved its headquarters near FLL in 1999. By 2000, FLL would be Spirit’s second-largest market behind Detroit, finally passing it in 2004.
This, however, did not make Spirit a success. It was still an airline that was floundering. That would change in 2005 when Ben Baldanza was hired as President, fully taking the reins after Indigo Partners bought into the airline in 2006.
Until this point, you probably had never heard of Spirit unless you lived in Detroit or some random city. But Ben and the team he built launched this airline into the stratosphere. He decided to take the Ryanair-style pricing model from Europe and bring it to the US. Base fares were dirt cheap, but you had to pay for everything from carry-on bags to soda or even the privilege of buying a ticket online. The options were endless, and public reaction was sheer horror.
But while people joked about how the airline would start charging to use the lav next, Spirit quietly found out that this model resonated. People were buying tickets, paying fees, and making this airline wildly successful. In the early days, Spirit relied on all this free publicity, good or bad, to help fill those airplanes. It went with low-brow jokes like its famed MILF sale (Many Islands, Low Fares). Every time it did something shocking, it would get more and more coverage.
It’s incredible just how much free publicity this airline got. Every late-night host got into the act, calling out Spirit as the butt of any joke remotely related to the airline industry. And it was all good as far as Spirit was concerned. Ben and his airline were (almost) never apologetic.
In Ben’s 10+ years at the helm, Spirit became a wild success. But there were already flaws developing. Most notably, this was an airline that did not care one bit about getting you to your destination on time. The idea was that you cared only about the fare, so Spirit would do whatever it could to keep its fares low. That meant running its fleet hard and having poor operational recovery. This started to wear thin on customers, and in 2016, the airline moved to Bob Fornaro to take over at the helm to create a kinder, gentler Spirit.
Bob wasn’t there for long, but soon after his successor Ted Christie took over, the pandemic hit. The pandemic masked other systemic issues which would hit Spirit hard. Spirit made its living with low, unbundled fares that the legacies couldn’t easily match. Once the legacies had basic economy to create a more equivalent fare product and they upgauged to allow for more seats to be sold at those low fares, it was the beginning of the end.
Spirit had to keep its costs low. To do that, it had to grow fast since hiring so many new (read:cheap) employees kept unit costs down. With the pandemic killing demand, Spirit was of course in trouble just like everyone else, but actually it was in even worse shape perversely thanks to the Payroll Support Program as part of the CARES Act. This program divvied up money to airlines to pay employees based on their mid-2019 employment levels. Airlines like Spirit that were growing? They had tougher choices.
Coming out of the pandemic, Spirit was financially weakened and its customers ended up moving more toward the legacies. The airline was also stuck with higher labor costs and no real growth opportunity. After 2019, the airline never made a dime.
With growth gone, debt high, and few options available, the best way out was a merger. It had agreed to be taken over by Frontier… but then JetBlue showed up. JetBlue was willing to pay a lot more, and despite attempts to resist, JetBlue won out. The only problem? The government was broadly against mergers and made the stupidly-misguided mistake of challenging this one. It won in court, but this was a pyrrhic victory.
Frontier was back in the picture again, but Spirit under CEO Ted Christie had an insanely-overinflated view of the airline’s value. Frontier made proposals, but Spirit wouldn’t even come into the same ballpark. Spirit went bankrupt in the fall of 2024, but it again didn’t realize how big its problems were. Frontier made more offers, but Spirit instead stuck with a wildly-impossible standalone exit plan which somehow gained approval. The airline came out of bankruptcy in March 2025 still sick.
At this point, Spirit was still bleeding and it had no viable plan. Ted Christie was out in April, taking a massive compensation plan with him that only hamstrung the airline further. By August, Spirit was bankrupt again.
Under new CEO Dave Davis, Spirit actually tried to save itself. Dave came from Sun Country, and he had a vision for how Spirit would survive. It was a much smaller airline that focused on Detroit — just as Sun Country focused on Minneapolis/St Paul — alongside its strong Fort Lauderdale operation and the slots it had in New York. The team did great work in slashing the airline down to size in bankruptcy this time. Had something like this happened the first time around, it might have been a different story. But it really was too late.
The nail in the coffin was the start of the Iran War. Spirit’s bankruptcy exit plan was already overly optimistic, but with fuel prices doubling overnight, the airline’s survival became nearly impossible. It was burning through cash, and the creditors in bankruptcy had to weigh their options. Would it be best to shut the thing down and liquidate? At least they could recover something.
The government once again stepped in to do something stupid, but this time it was an attempt to help instead of hurt Spirit. The administration was concerned about the optics of lost jobs, something that would have happened at some point anyway. But the demise was very clearly hastened by the war in Iran and rising fuel, so a $500 million bailout was floated.
The problem is if you offer that bailout without any strings, then everyone will want one. It can’t be done. So they tried to structure this as a loan that could become equity. And that equity could then be sold to a merger partner for a profit. We’ve seen constructs like this before, but it was on a much larger scale, like when the US automakers were bailed out. But this was a different story.
Spirit was small, and what was of interest in Fort Lauderdale, Detroit, and New York would be eagerly gobbled up by other airlines. (That’s a topic of a future post.) There would be a place for many of those employees elsewhere. At a time when no airline is thinking it needs to add a ton more capacity, this would actually be good for the industry overall. That, however, didn’t seal Spirit’s fate. In the end, it was Spirit’s creditors that brought the airline to its end.
These creditors were already worried about what kind of recovery they were going to have in a failure as cash dwindled. But if the government put $500 million into Spirit, it was going to be in first position. That means if Spirit did fail, any recovery would first go to the government and then the existing creditors would pick at the scraps.
The argument can easily be made that these creditors should never have put money into Spirit after the first bankruptcy anyway — there has been a lot of good money being thrown after bad at this airline — but they finally decided enough was enough.
And so, we say so long to Spirit. This was an airline that mattered. The people who made it the first US ULCC under Ben Baldanza deserve real credit for building something new, unique, and successful. But once Ted Christie took over, there was nothing done to better this airline as management just watched it circle the drain.
As we say farewell to Spirit, how about more one sale for the road?
