Spirit's Outspoken CEO Steps Down
One of the most recognizable CEOs in the airline industry abruptly stepped down on Tuesday. Ben Baldanza had been President and CEO of Spirit Airlines for the past decade. Baldanza was known for his outspoken personality and for pushing airline fees to new heights. He also turned Spirit from a loss-making company into one of America’s most profitable airlines.
He will be replaced by Robert Fornaro, who was once the head of AirTran (before it was swallowed up by Southwest).
Baldanza highlighted his successes as he announced his departure: “Following the tremendous growth and success of Spirit over the last 10 years, the Board and I have concluded that this is the right time to implement an orderly succession plan.”
Long-term success, but short-term struggles
It is true that Spirit grew into one of America’s most profitable airlines under Baldanza’s watch. However, as other airlines saw profits rise over the last year or so, they began to lower their fares so that they could better compete with ultra-budget carriers like Spirit. Suddenly, Spirit’s prices didn’t seem as low as they once did and all the extra fees no longer seemed like they were “worth it” to many fliers. Investors were unhappy with the airline in 2015 as well. Spirit’s stock is now worth about half of what is was a year ago, when it peaked at over $80 per share.
Even though the “orderly succession” is underway, things won’t change that much at Spirit. In a statement after he was introduced as the new CEO and President, Fornaro pledged allegiance to Spirit’s current ultra-budget philosophy: “Spirit’s focus will remain delivering a customer-friendly product and providing the lowest total price to the places we fly. I look forward to working with the rest of Spirit’s management team and team members to grow the Company’s proven ultra low-cost model and drive value for all of Spirit’s stockholders.”
A colorful figure
In many ways, Baldanza was of the same ilk as Ryanair CEO Michael O’Leary. He was known for being brash and outspoken. He laughed at criticism about the excessive fees charged by Spirit. He was even rumored to have taped travelers’ complaint emails to his office bookshelves.
He approved ad campaigns that poked fun at Congressman Anthony Weiner’s sex scandal, and he deployed promotional teams in Los Angeles that included bikini-wearing dancers holding signs that said "You can take me home for $9." (This was a reference to the price of promotional fares offered by Spirit at that time and also an extremely obvious double entendre).
Despite these quirks (or perhaps because of them?), Spirit thrived with Baldanza at the helm. The airline expanded overseas during his tenure. It now flies to 56 destinations in the U.S., Latin America and the Caribbean.
Spirit's fees aren’t leaving with Baldanza
In a way, Spirit’s fee policies hurt it in the long run. The aggressive a la carte pricing idea was initially so successful that other airlines adopted it. As competitors developed these other revenue streams, they were better able to keep their fares low. As fuel prices dropped and profits rose, Spirit was no longer able to rely solely on its low prices. Though major airlines are better able to compete, low cost carriers are still thriving. Spirit will most likely tweak its business model, not completely overhaul it. Baldanza's beloved fees will probably not be going anywhere anytime soon.
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