The flying public has been mourning Spirit Airlines since its abrupt closure was officially announced in the wee hours of Saturday, May 2.
Some loyal passengers are so distraught that they have joined a crowdfunding effort to save the low-cost carrier and launch “Spirit 2.0.” The founder of the initiative, Hunter Peterson, has been encouraging travelers to band together to purchase the airline and nationalize it in order to have a carrier that is run by the people.
The idea struck a cord with travelers. So far the “Let’s Buy Spirit” crowdfunding site has raised $132 million in pledges from 133,508 people.
It all seems like an organized, straightforward idea. But closing down an airline has many moving pieces that are likely to throw a wrench in the rebirth of Spirit 2.0.
“Restarting an airline is a much more complicated task than relaunching most other types of businesses,” says Bill McGee, senior fellow for aviation at the American Economic Liberties Project. “The FAA previously issued an operating certificate to Spirit and now presumably that certificate has been voided.”
Even more complex than the safety authorization to operate as an air carrier are the leftover financial components of Spirit’s business, which bondholders and creditors will want to nab quickly to maximize their shares of the airline’s remaining assets.
“We have seen with past airline shutdowns that the banks and large financial institutions swoop in early, so the status of Spirit's major assets--financed or leased aircraft, airport space, maintenance facilities--is in question even just a few days after a shutdown.”
Indeed, Spirit executives began the process of liquidating what remains of the company on Tuesday in bankruptcy court. The airline presented a $217 million plan to wind down its operations in a hearing in White Plains, New York, according to CNBC.
During the hearing, Spirit’s lawyers proposed selling off much of what’s left of the airline’s remaining assets, including its airport landing slots and gates, aircraft, engines, and spare parts, according to the AP.
The carrier will still need to spend more money as it continues to wind down its business. About $52 million of Spirit’s remaining budget is earmarked for employee expenses through July and another $52 million is allotted to cover remaining aircraft costs.
Crucially, it doesn’t seem as though Spirit is able to wait around for the crowdsourced funds to come together: the airline asked the bankruptcy court for expedited approval of its liquidation plan. “Any delay will cause chaos, confusion and cost the estate significant time and money,” a court motion filed by the airline stated.
The liquidation plan was approved at the end of the hearing by U.S. Bankruptcy Judge Sean Lane. With these wheels set into motion, it becomes less likely that another entity could swoop in and save the business.
Spirit’s lawyers also shared in court on Tuesday that the carrier’s fuel expenses jumped by about $100 million in March and April amid the oil crisis spurred by the war in Iran.
That high tab would likely complicate the public relaunch of Spirit 2.0 even further. Plus, competing airlines have already moved into Spirit’s former markets, launching new flights to cover where the carrier operated and likely edging out any relaunched version of Spirit.
“This type of proposal raises more questions than it answers,” McGee says of the idea to collectively purchase Spirit. “But if there is a way to keep Spirit flying, every avenue is worth pursuing."
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