Morning Brew Daily
Spirit Airlines Grounded by Bankruptcy & New FCC Threatens Big Tech
Tue, 19 Nov 2024
Episode 456: Neal and Toby are back! They chat about Spirit Airlines filing for bankruptcy after years of its struggling business. Then, Trump hires his new chair of the FCC, Brendan Carr, who is a big proponent of Elon Musk, but a big opponent of Big Tech. Next, a Pew report shows 1 in 5 adults get their news from social media influencers as the trust in legacy media wanes. Meanwhile, dermatology is becoming the new ‘it’ job in the medical industry. Lastly, the biggest headlines to close out your day. 00:00 - Alaskan town won’t see sunlight for a while 2:40 - Spirit Airlines files for bankruptcy 7:30 - Trump’s newly appointed FCC commissioner 11:40 - People get their news from influencers 17:00 - Toby’s Trends: Dermatologists 20:30 - Final headlines! Download the Yahoo! Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Get your Morning Brew Book of Crosswords HERE: shop.morningbrew.com Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 4: What trends are emerging in the dermatology field?
The airline did come out and assure customers that it expects to continue to operate normally now and in the future. So if you forgot to book a Thanksgiving flight home, you can still look their way. Its stock is a different story, though, after falling over 90% so far this year.
Spirit is going to delist from the New York Stock Exchange as it sorts through total debt listed at nine billion dollars Toby you already laid out some of the reasons why spirits struggled to compete in the airline industry But what do you think ultimately sank it it was my character
Marriott bag fiasco, obviously. It was clearly small enough to fit in the seat in front of me. No, it was a variety of things. Interestingly enough, though, demand wasn't really the issue. Spirit flew 2% more passengers in the first half of this year than in the first six months of 2023. But the airline took almost 20% less revenue per mile.
Chapter 5: What are the latest headlines in today’s news?
It was just hard to compete with the industry writ large. It was kind of caught in what we call the messy middle. A lot of U.S. airlines offer that maximum cheapness ticket tier where it's very bare bones, no boarding fees. No boarding privileges and just very basic economy seats.
But it also couldn't compete at the higher end of the spectrum, too, with more luxury characters like Delta that people were clearly gravitating towards post pandemic. So it just was the worst of both worlds, even though more people were flying it. It just couldn't reliably charge those passengers enough money to operate profitably.
Yeah, I mean, there was a price war in the airline industry over the past few years. There was too much capacity. It doesn't serve international markets that are a higher margin for the carriers like Delta and United. And it was I think of it as the Snapchat of the airline industry. First of all, it's yellow. But also, it introduced a lot of innovative features.
Remember, if you go back to 2006 when it introduced this ultra discount budget model, it kind of took the airline industry by storm. It was super successful. The concept of just paying $60 for a one-way flight and just maybe carrying a backpack was quite revolutionary at the time. The problem is the Facebook of the of the airline world decided to just copy it.
And at the same time, they also offer a lot of other things that make them money. So in the context of this price war, Spirit lost because it just couldn't charge enough. And it did try to make moves to compete with the big guys. You know, earlier this year, it decided to roll out four different bundles of fares that you could do. It came with something that
somewhat resembles first class, where you can board more quickly, you can have more refreshments. It comes with a few more perks, but it did seem that that was a little too late.
It really was that Spirit was almost too powerful a force in the airline industry that ended up sinking it because Spirit pressured others to keep their fares lower, pressured others to innovate and offer those lower fares, and the fact that they could exert that pressure was part of the reason why the Justice Department...
overthrew a successful lawsuit that prevented the JetBlue Spirit merger on the grounds that losing Spirit would harm the consumer, losing Spirit's low fares would harm the consumer. But then everyone was saying, look down the road a little bit. Spirit is struggling. If we don't let this merger happen, you probably might lose Spirit to bankruptcy anyways.
So it is one of those things where the Justice Department was right that Spirit is this – exerts this downward pressure on prices because of the fares it offers, but the fact that they blocked the merger made it so that Spirit has this murky path forward going into the future.
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