Spirit is defiant about merging with JetBlue and optimistic about business
Spirit Airlines CEO Ted Christie called last year "unsatisfactory" for the ultra low-cost airline during the company's fourth quarter conference call with investors Thursday morning.
The company lost money and then its merger with JetBlue was blocked by a federal judge last month. The company is appealing that decision and Christie did not hold back in his first substantial comments since the judge ruled the corporate marriage would be anti-competitive and hurt air travelers.
"It is beyond absurd for the government to claim a victory for the American consumer. In fact, it is ridiculous," Christie said.
He claimed blocking JetBlue from buying Spirit "perpetuates a small group of 'haves' that control the market at the expense of the 'have nots' and the American consumer."
JetBlue is the sixth largest carrier while Spirit is seventh. A merger would make the combined carrier the fifth largest with about 10% market share. The next largest airline would be United with 16% market share, according to Bureau of Transportation data.
"After 20-plus years of working for lower-cost carriers, it has become ever more clear to me that we exist in an uneven playing field," Christie said.
The carriers are the dominant airlines serving the Fort Lauderdale-Hollywood International Airport. Together, they were responsible for almost half of the passenger air traffic from January through November, the latest time period available from Broward County.
The company hopes to reassure passengers and investors that even as it continues to fight for the merger, its business is improving.
Spirit said spring break travel reservations are strong. In the past year the carrier added 55 new routes and ended or suspended more than three dozen in order to concentrate on more profitable flights, including those in and out of Fort Lauderdale-Hollywood International Airport.
"Some of it has gone to Fort Lauderdale where we continue to see very good strength," said Spirit Chief Commercial Officer Matt Klein. He also pointed to the New York metropolitan market as a place with strong passenger demand.
The company's stock price remains about half what it was the day before its JetBlue buy-out was blocked. That ruling brought investor concerns about the airline's financial position. Christie called speculation about the company's ability to survive a "misguided narrative."
The company reported it ended last year with access to $1.3 billion in cash and credit. Spirit lost $183 million in the fourth quarter. For the entire year, it was $447 million in the red. Both are improvements compared to a year earlier.
"It’s progress in the right direction that gives us confidence that we can start moving the cash needle in the right way," Klein said.
It also forecast that it will be cash flow positive in the second quarter through the rest of the year.
Spirit's outlook includes some amount of money it expects to receive from jet engine maker Pratt and Whitney, which has grounded planes as their engines are inspected for a problem and repaired. Spirit expects dozens of its planes to be out of service throughout the year. The two companies are negotiating a settlement for the disruption, but there is no agreement yet.