How is Southwest making money and generating profits and revenue whereas Spirit failed and JetBlue is on the verge of bankruptcy?
Posted by Aggressive-Lock6840@reddit | aviation | View on Reddit | 148 comments
With Spirit going out of business and JetBlue on the verge of bankruptcy low cost travel is failing. However, when looking at the number Southwest the largest low cost carrier is thriving with a very clean balance sheet, low debt and 227 Million net income with over a billion dollars in net income projected for this year and over a 4.00 estimated margins. I know Southwest is moving more towards a model like Alaska where it’s a hybrid carrier but how come they seem so much stronger than other low cost carriers and even American Airlines. The only 2 airlines that appear stronger than them in finances is United and Delta. Spirit obviously failed, JetBlue is on the verge of failing and Frontier isn’t doing great either.
Healthy-Sort-7293@reddit
You can’t say that JetBlue is on the verge of bankruptcy, that’s just speculation.
Perryfl@reddit
bro southwest right now is more expensive then delta....
darthjeffrey@reddit
Spirit was stuck with 70 grounded A320 Neos that had unfixable / non-replaceable engines. Each engine had to be shipped back to Pratt & Whitney for rebuild. That made up 20% of their fleet that they still had to pay for, but could not use. My understanding is that the P&W rebuild backlog is counted in years of waiting time.
ImplicitEmpiricism@reddit
spirit also had a ton of debt. 7+ billion, which is why they declared bankruptcy
cyberentomology@reddit
And then fuel got stupid expensive on top of that and that was the final knife.
fly_awayyy@reddit
Well it was combined with a failing business model as well. Dont forget frontier again offered to buy them again twice within the last year yet they declined and chose this reality.
cyberentomology@reddit
Fuel prices are about to fuck everyone else over too. Although without the spike in fuel, Spirit might have lasted another 6 months.
CitricAcidRinse@reddit
US carriers buy fuel when tickets are sold. Some international carriers still try to hedge fuel costs, but most are also just buying fuel when tickets are sold. It guarantees that the cost of fuel is already paid at a price justifiable by the ticket cost without the downside risks of hedging fuel.
SmugAlpaca@reddit
One of those offers was “$0.00 per share” lol
The story has more to do with creditors I think, they wanted to get a return on their investment. Debt was distressed, business model failing, easier to sell it for parts than keep extending debt.
fly_awayyy@reddit
You know shareholders get wiped out when the company goes bankrupt? The other part for the creditors wanting a liquidation would make sense.
Jaggedmallard26@reddit
They said creditors not shareholders. Creditors get divvied out the assets based on their contractual status. Creditors want businesses to survive so they get paid back in full (and with no additional liquidation fees) but they have very different incentives to shareholders.
fly_awayyy@reddit
He mentioned shareholders at the beginning of the comment did he not mentioning at $0.00 a share? That’s what it was in response to. Shareholder too want the business to go a direction they get something out of their money. So hence why im saying full circle either way they got wiped out vs the alternate $0 a share… an investment group with even a 10% stake at the times valued at multi million im sure is not happy with their investment and money getting wiped out. That was the point I was trying to make.
SmugAlpaca@reddit
I never mentioned shareholders, because shareholders are largely irrelevant in a bankruptcy - instead we talk about "stakeholders," usually your creditors. The only reason I mentioned $0.00/share is because it was a liquidation of shareholder value, all of this is just debt/equity swap stuff.
The final Frontier offer was to issue $400m in junior Frontier debt and a minority 19% stake in the combined entity, the shareholders were always going to get wiped out. The creditors (Ares/Citadel/Cyrus) were already set to become the equity owners of the airline under the Chapter 11 exit plan, so Spirit's counter was $1.2bn to the creditors, $600m cash infusion, which would get the creditors off their back, but Frontier correctly judged would put them out of business.
The math for the PE firms here is easy: will you make back the other $800m with your 19% minority stake in the "New Frontier"? Probably not, but you might make more than $400m if you can sell it later, or even if you have to sell it for parts, and obviously they couldn't predict gas prices going to levels higher than the Iraq War.
This is also why the administration's bailout was laughable - it's like they were entirely talking past each other. $500m, 90% stake is significantly worse than the Frontier offer from last year, government was seeking seniority for their debt, so the creditors would've gotten totally wiped out if it went bust later.
Could it have been saved? Probably not, but definitely not after February 2025.
SmugAlpaca@reddit
Well yeah, but the final Frontier offer last year at 0.00 was already liquidation. The senior debt was held by private credit (Ares, Citadel, Cyrus) and they were vehemently opposed to a government deal. The whole 90% government ownership thing was a total non-starter since it would have put them ahead of the senior debt holders, which is a tough spot when you’re $795m long into an airline that can’t turn a profit. Screw the shareholders - doesn’t matter, the business will never make good on the debt, so maybe you get some of that back in Chapter 7.
Sad story but very predictable.
Veritech-1@reddit
At its peak, spirit had just over 200 airplanes. It was 35-40% of their fleet.
BurtHurtmanHurtz@reddit
This was a fuck
182RG@reddit
Have you priced a Southwest ticket?
syzygialchaos@reddit
Yeah, they’re expensive. I recently booked a round trip from Albuquerque to LAX and Southwest was more than both American and Delta by a large margin.
Practical-Pair5015@reddit
They’ve never been low cost based on all my searching (2 decades). The $49 fares were always a myth (ahem false advertising).
DumbIdeaNo2@reddit
No. $49 was real. Only for certain routes. LA was NOT a part of those fares. Houston. San Diego. Vegas every now and then and Sacramento I think we’re all the routes I flew for that much. Backpack full of clothes and bobs your uncle.
Worca_@reddit
I always seen them available at like 6 am out of Denver but they also have a huge presence here
splane21@reddit
No they exist I've used them multiple times in recent years its just between certain markets. I've used the $79 fares even more (even more markets)
Glass-Bobcat4357@reddit
It's the companion pass that made it worth it for me (historically). I've flown SW once since they changed to assigned seats and checked bag fees.
MmmSteaky@reddit
The cost in low cost carrier doesn’t refer to the cost to the consumer.
Practical-Pair5015@reddit
Fair.
silverbullet1972@reddit
In the mid 2000s, due to divorce I was flying my kids between San Diego and Phoenix. I was able to score $49/ea on weekends all the time and it was glorious!
dragerfroe@reddit
Happy for you that you got to see your rugrats! Good news.
lyricaldorian@reddit
Around the same time I would travel from San Diego to upstate NY and get those deals as well
MmmSteaky@reddit
No, no, no, didn’t you read above? That’s a myth! You’re living a myth!
guyinsunglasses@reddit
They do exist, but they're on routes to small cities from secondary airports
Jaggedmallard26@reddit
Some of those can be lifesavers for people. Ryanair does some weird small-medium city <-> small-medium city routes that are often busy with people who are travelling home to see family (or feeling adventurous)
aurorasearching@reddit
Have you ever wanted to spend a Wednesday in Amarillo?
MountainMan720@reddit
They exist for 5 AM flights on a Tuesday. But who wants to fly then?
Jaggedmallard26@reddit
Thats the successful European ULCC model! Fly direct to "Milan" (actual Bergamo) for the price of your weekly bus fare at 0530am midweek and its always fully booked. Peoples revealed preference in Europe is they would rather fly at an unholy hour to an airport that probably shouldn't have the name it has from their local regional airport than have to drive/train to a hub or get a connecting flight.
RespectedPath@reddit
And usually only in one direction.
HRL to HOU at 5am on Tueday for $49. HOU to HRL any days afterwards, $350.
They get your money either way.
oSuJeff97@reddit
Yeah but back then the legacies would be charging $450 for the same route. There was definitely a difference between SWA and the legacies back in the day.
quietflyr@reddit
Looks like they only get your money one way
MyDF-Throwaway@reddit
Where I live it's sometimes the only option if you don't want to spend the whole day on a layover and arrive at 11:59pm.
Wonderful_Virus_6562@reddit
they’re flash sales
oSuJeff97@reddit
There was definitely a difference between them and the legacies 20 years ago. They may not have been $49, but if a certain route of legacies were, say, $400, Southwest would always be like $250-300 or so on the same route.
But those days are long gone.
duckwebs@reddit
Low cost per seat mile. Pricing is as high as they can get away with.
fiveoclocksomewhere5@reddit
During covid I was doing long distance and scored 39 fares from MDW to CMH biweekly
jph200@reddit
Yeah, way back in the day - like over 20 years ago, they flew primarily to secondary airports, and you could usually find a great price. It's been a long time since Southwest has been a low cost carrier.
MechanicalPulp@reddit
There is a difference between low cost and low price. SWA does a great job keeping costs in check, and then intelligently managing revenue. People hate on them for their new ancillary fees, but those fees are very high margin
Jaggedmallard26@reddit
You just have to play the game. One of the selling points of ULCCs is its no frills by default and you save money not having them implicitly included in the ticket but can add the ones you care about back in. If you're going to add them all back in then you've tried to use a ULCC like a regular carrier and have defeated the point.
The complaints they always get around that are thus daft, if you don't want the no frills, unholy hours ticket then don't book with the no frills, unholy hours airline and then complain!
oversized_hoodie@reddit
Yeah, the only reason I'm flying Southwest is that I don't have a damn layover.
aurorasearching@reddit
Opposite for me. I found a route where they were 60% the price of American, but there were zero direct flights, so it was 3 times as long of a travel day.
alex9001@reddit
Yeah - SWA and UAL are the only direct flights to a city I visit a couple times a year, and it’s a toss up who’s cheaper on any given date
skunimatrix@reddit
Last thanksgiving they were $1800 than United through AMEX Travel.
Brilliant-Artist6883@reddit
Because Southwest sells tickets to people who didn’t fail at life. Therefore they actually make a profit on ticket sales. Shocking concept.
RightTechnology7839@reddit
Southwest is neither a low fare nor a low cost airline. I don’t understand why people keep referring to them as that.
Tony_Three_Pies@reddit
Southwest has a very different model than Spirit did. They’re not a ULCC. Southwest doesn’t try to sell transcons for $12.99 and a firm handshake.
I suppose there’s some technical definition of a “LCC” but I’m not even sure SW is a low cost carrier anymore. Their fares often aren’t cheaper than their legacy counterparts and they don’t do any of the service decoupling that Spirit did.
Aggressive-Lock6840@reddit (OP)
I feel like they are more of a legacy. I love at both a United hub and a Southwest crew base and they’re very similar in prices with Southwest being slightly lower for some markets but roughly the same.
Feel-good-@reddit
The big thing is at regional airports like St Louis and KC, southwest has direct flights to MANY places that no legacy carrier goes direct. Their business model is having random once aa day directs that people will pick rather than connecting Delta in Atlanta. Spirit always had a competitor flying the same direct routes.
Easy_Money_@reddit
Legacy just means an airline that existed prior to deregulation. In the US, the only surviving legacy carriers are Delta, United, American, and Alaska/Hawaiian.
Interesting_Dingo_88@reddit
Southwest was very much in business prior to deregulation, so they'd fit that definition.
907flyer@reddit
SWA was intrastate (only within the state of Texas), not interstate at deregulation.
Easy_Money_@reddit
Southwest was an intrastate carrier from 1967–1979, so it is not typically included in that definition. Sorry, I provided a simplified version
MmmSteaky@reddit
For the millionth time: *low cost does not refer to the price of the tickets*.
Tony_Three_Pies@reddit
Low operating costs and low ticket prices are part and parcel for an LCC or ULCC. Low fares are absolutely part of what defines a "low cost" carrier.
MmmSteaky@reddit
Incorrect.
Tony_Three_Pies@reddit
I'm not so confident as you that there is a single unimpeachable definition of an LCC but everything I'm finding makes it clear that fare price is intrinsic to the idea of an LCC and ULCC.
You must be seeing some other source that's more definitive than I'm able to find.
Key Characteristics of Low-Cost Carriers:
Low Base Fares: The ticket price usually covers only transportation; extras like checked baggage, seat selection, meals, and boarding priority come with additional fees.
CantDoThatOnTelevzn@reddit
What does it refer to then, because their operating costs are not low either.
adjust_your_set@reddit
If we look at everyone’s most recent 10q for CASM …
American - $0.1938
United - $0.1752
Delta (excluding refinery ops) - $0.1981
Southwest - $0.1646
Southwest is still *lower* cost, but they’re also the only one of those three without significant international long haul operations. I imagine their CASM is probably comparable with the three legacies at the domestic and short haul international level.
BigDiesel07@reddit
Is the higher number better or worse?
adjust_your_set@reddit
It’s a cost number per seat mile flown, so lower is better.
lolcutler@reddit
higher is more expensive it’s cost per available seat mile
iamslevemcdichael@reddit
I /usually/ bother to check Southwest prices when flying (since you can’t compare them via most airfare booking sites), and basically never book them. 95% of the time they’re more expensive than the legacies ime. I no longer consider them a low cost airline tbh. I don’t mind flying southwest, but it’s rarely worth it for me.
I_am_Mun_C@reddit
1) Southwest was going through a bit of a rough patch there until recently, even they are not immune to evolving passenger preferences and market conditions. They’ve successfully made some changes which appear to be working well, but the old Southwest model was showing itself to be antiquated.
2) In many markets, Southwest doesn’t directly compete with Legacy carriers, as they often use “secondary” airports. So instead of flying ORD-IAD or IAH-SFO. They’ll fly MDW-BWI or HOU-OAK which saves on costs greatly. For the most part JetBlue and Spirit are/were directly competing with other major carriers, which is more difficult.
3) I’d hesitate to use the term low-cost carrier for Southwest at this point, even if it is technically correct. Every time I look at purchasing tickets on them, they are charging noticeably more than American or United.
Bluestreak2005@reddit
Also part of the reason Southwest is having issues is they were heavily involved with Boeing 737 MAX. They have several hundred orders which all got delayed thanks to covid and Boeing. they were one of the launch customers.
Southwest had 81 undelivered aircraft entering 2026. At the end of 2026, they are estimating 101 undelivered aircraft from their contractual obligations. If Boeing actually gets its deliveries and production up this year, Southwest will be a huge benefactor.
https://simpleflying.com/broken-promises-southwest-impacted-boeing-737-delays/
sofixa11@reddit
Also an important note is that they've been forced to accept bigger planes (Max 8 instead of 7) because it's the smallest certified Max, which for a while forced them to fly with low load factors on routes designed for a Max 7/700.
cyberentomology@reddit
And Boeing has 2 dozen Max7s already built for Southwest…
cyberentomology@reddit
Southwest spent billions in 2023 adding 15,000 staff and preparing for route expansion in 2024, when they were expecting about 100 deliveries and the Max7 in 2025), and then alaska blew the doors off that plan, and in 2024 they got 20 deliveries and 50 retirements. They had to scale way back on their plans.
Less_Suit5502@reddit
Southwest is basicly the only option in Baltimore and for the DC region United is really the only other option. That's at least 5 million people.
ohhellnaah@reddit
AA @DCA
Less_Suit5502@reddit
Not as many options at DCA from or they were a lot more expensive then United or Southwest.
Everytime I go to book flights it's either United out of Dullas or Southwest out of BWI with the best prices.
veloace@reddit
Yeah, I travel a fair amount for work and I don’t think I’ve ever used southwest because of price. American, Delta, and SW are about my only options for the routes I fly and are pretty close in price. American has an atrocious 50% success rate for getting me to work (and also taught me that there is a thing called “trip in vain”) and while Southwest has been delayed by hours before, they’ve always got me to the destination on the same day as promised, except for one single instance.
It just seems like SW tries harder to make connections work, and have delayed planes or pulled me off a plane to switch flights if they knew a connection wasn’t gonna work. American just leaves me stranded at the intermediary.
cyberentomology@reddit
I fly about 80 legs a year on AA, and my average RT fare (4 legs) has gone from about $700 in mid-2024, to about $850 now.
Basic_Butterscotch@reddit
Southwest practically has a monopoly on flights to midway at this point. I fly there several times a year and the only other option usually is Delta for significantly more money.
shiftyjku@reddit
I would venture guess JetBlue’s main problem is they chose two very expensive and delay-prone hubs. Also they are dependent on the northeast leisure-heavy routes which have a lot of competition and do not lend themselves to much gold plating. They are trying establish TATL but in a very thin way, which doesn’t give you many tickets to amortize the cost of running a line station in another country/economy.
Southwest is entrenched in many markets nationwide so their weather exposure is more diffuse, benefits from operating a single aircraft type, and—at least until recently—felt more like they know who they are/want to be.
Jaggedmallard26@reddit
Are the dynamics that different for the US ULCCs compared to the European ones? The European ones run a huge amount of leisure routes and the cheap fares are subsidised by families and drunken holiday groups paying for extra luggage or seating choice.
cyclephotos@reddit
What does gold plating mean?
shiftyjku@reddit
Selling things beyond the ticket like second checked bag, lounge access, even food and bev. Your family going to Disney doesn’t spend on that stuff like a corporate type going transcon.
cyclephotos@reddit
Thanks!
fly_awayyy@reddit
JetBlue can’t run a competent operation. The money is there in their hubs and transatlantic makes money. They have a lot of problems stemming from old people in leadership roles. They also underutilized their fleet “shrinking to profitability”. They were also as well affected by PW GTF groundings although not as much more.
Global-Cartoonist622@reddit
Southwest’s use of secondary airports and refusal to compete on base-level pricing shows they figured out the difference between being low-cost and being cheap—something Spirit and JetBlue never quite mastered.
Senior-Cantaloupe-69@reddit
Southwest is the preferred airline for a lot of business travelers. Not me. But, guys like my boss who take them every other week or more. I don’t get the allure- American is rarely much more out of PHX. But, many people love them.
DigitalPhear13@reddit
Spirit had over $8 billion it debt. Making payments on that debt is probably what killed them in the end with a low margin industry with rocketing fuel prices. Someone said in another post Spirit thought they were being bought by JetBlue, so the company basically just sat around and did nothing on the corporate side for over a year thinking everything was soon to become JetBlue’s problem. When the DOJ killed the deal that killed Spirit, it just took this long for the body to finally bleed out.
Aggressive-Lock6840@reddit (OP)
8 billion in debt is insane. I feel bad for the people who lost their jobs but Spirit’s management did that to themselves not paying off their debt because they thought JetBlue was going to buy them.
RitzHyatt@reddit
To be somewhat fair to Spirit’s management (not that they didn’t horribly mismanage the company in many other ways, because they did), they had absolutely no reason whatsoever to ever think that the deal was going to be blocked.
It’s literally unprecedented. Mega mergers like Delta-Northwest in 2008, United-Continental in 2010, Southwest-AirTrain in 2011, American-US Airways in 2013 were all perfectly fine, but merging the 6th and 7th largest airlines to create a company that would have had \~10% of the domestic market? That’s a step too far!
Unfortunately we’re increasingly letting infantile populist thinking have a bigger say in correcting our structural economic issues, which only makes the problem significantly worse as we sit here feeling the after effects of a bankrupt Spirit Airlines and soon-to-be-sold JetBlue airlines to what’s likely going to be United, making the largest carriers even larger and giving them more pricing power over consumers at their fortress hubs.
If we lived in a sane world, the lesson we should take away is to not let those with the minds of children lead the FTC and DOJ’s antitrust division, but it seems we’re in an even lower position now than we were when this decision was made…
biggerty123@reddit
I mean, yes they did. Anyone navigating any buyout of this merger and magnitude would account for it being blocked. "no reason whatsoever?" come on
Tony_Three_Pies@reddit
It was not a surprise that the merger was blocked. Spirits board at the time wanted to stick with Frontier and rejected the JetBlue offer specifically because of anti trust concerns. The shareholders voted for JetBlue anyway.
Whether or not the merger should have been blocked is a different issue, but the block wasn’t out of the blue.
RitzHyatt@reddit
This is just post hoc nonsense from somebody with no experience in antitrust law. Every renowned antitrust law firm has spoken about the unprecedented nature of this deal being blocked, but to a random “top 1% commenter” redditor, it all was so obvious!
Tony_Three_Pies@reddit
I’m not a lawyer or a federal judge (apparently you’re both?) so I certainly don’t have any direct knowledge. What I do remember from the time was Spirit (and even JetBlue) very clearly indicating that the risk of the merger being blocked was very high. That’s why the Spirit board rejected the JetBlue offer. JetBlue then forced the issue and the Spirit shareholders bit the lure. This isn’t retrospective, it’s what they were saying at the time.
You don’t need to take a 1% commenters word for it. Would the Spirit CEO suffice?
https://x.com/SquawkCNBC/status/1527251367617826817
OracleofFl@reddit
Spirit CEO?? Ha! He isn't a lawyer either! What does he know! /s
trevor_plantaginous@reddit
I'll take it a step further - Jetblue never had any intention of going through with the acquisition and was banking on the gov't blocking it. They did it to block the frontier merger. Keep in mind the Alaska/Hawaiian got through the same administration relatively easy. What was notable was that Jetblue never really fought the gov't or made relatively easy concessions to get the approval. The Spirit board knew it wasn't a sincere offer.
nobody65535@reddit
What stopped a frontier -spirit tie up after JetBlue walked away?
trevor_plantaginous@reddit
Frontier tried - they made a $2.2b offer last year that spirit rejected. It was a really low ball offer and I don’t think the shareholders really thought insolvency would happen. I think they assumed they’d get a bail out.
Raccoon_Ratatouille@reddit
Did the CEO’s in the approved mergers testify that they would increase prices and cut routes to decrease competition?
RitzHyatt@reddit
What exactly do you think happens after an airline merger?
There’s no point in continuing this discussion if you’re going to aggressively defend a position about a situation where you lack any knowledge beyond what you’ve read on social media?
Raccoon_Ratatouille@reddit
That’s not the point. Antitrust law’s sole purpose is to prevent corporations from merging in order to harm consumers. They could have said anything in court, but they said the 3 dumbest things possible: 1. Spirit didn’t need the merger to survive. 2. They would raise prices. 3. They would cut routes to reduce competition.
If you want to torpedo your own merger, say that in court. If you want the merger to be approved, say anything else.
sound-of-impact@reddit
B6 has over 9 billion in debt and hasn't posted a profit since 2019.
BeeDubba@reddit
I'm not sure if it's significant, but B6 owns a bunch of their planes. Spirit effectively owned zero.
sound-of-impact@reddit
Spirit owned a lot until they sold them and did leasebacks. Just a matter of liquidating assets to add cash. While owning may be beneficial it also has downsides of depreciation as well as in general an older fleet.
Microplasticsharts@reddit
Don’t realize Spirit had $8b in debt, that probably would have taken down JetBlue if the merger had gone through.
WesternBlueRanger@reddit
Yep; had that merger went through, both Spirit and JetBlue would be bankrupt today.
Whilst many people thought that the merger rejection made no sense, it did save JetBlue for now as they would not be saddled with billions of dollars of debt.
OracleofFl@reddit
This and many more airplanes sidelined with the Pratt & Whitney problem.
WesternBlueRanger@reddit
CFM is having issues with durability of the high pressure sections on the LEAP engine.
Nobody is having the durability and time on wing that the old CFM-56 engine had. Both companies are pushing material sciences to the absolute limits and are experiencing problems as a result.
gefahr@reddit
Did the merger not include any kind of restructuring of their debt? That's surprising, though I didn't follow the deal news.
WesternBlueRanger@reddit
Even if they were to restructure the debt, it's still a lot of debt, and neither airline was particularly healthy.
JetBlue's financial picture right now says they are over $9 billion dollars in debt. Combined, that's over $17 billion dollars in debt; that's almost as much debt as Delta Air Lines has, and Delta is a significantly bigger airline.
eron6000ad@reddit
Spirit is a low cost airline for low income people. In a failing economy they have lost their customer base. The last straw was fuel cost volatility.
AccomplishedCicada60@reddit
Southwest just got taken over by private equity…..
Dependent-Juice5361@reddit
No they didn’t. They are quite literally still publically traded
umdcs_vim@reddit
WA
xyeahtony@reddit
Southwest is not a "low cost carrier" and hasn't been for a long time. Their prices are on par with the big 3.
coachclapper@reddit
Southwest is a low cost airline, not a low fare.
junebug172@reddit
SWA isn’t a ULCC. It isn’t even an LCC.
They actually charge proper fares and fees.
oSuJeff97@reddit
Because they aren’t “low cost” any more. They saw the writing on the wall and knew if they didn’t raise prices they would go out of business… so they raised prices.
Lanky-Rabbit8694@reddit
Brand loyalty and credit cards
Marty_DiBergi@reddit
Several years ago when I was researching the Delta stock my broker advised me to hold as it flew itself into bankruptcy, I recall that WN had significant fuel hedges. I wonder if that’s still the case, and that they can get through much of the current situation.
CashAny3436@reddit
Southwest unwound its fuel hedging program in 2024 saying it was an overall losing strategy. Delta does not need fuel hedging. The airline owns Monroe Energy with a refinery in Trainer, Pennsylvania. Monroe is making a lot of money right now offsetting some of Delta’s fuel costs. The Monroe name comes from Delta’s original home: Monroe, Louisiana.
Sensitive_Koala_9544@reddit
Many of these airlines “hedge” against their fuel costs with complex options and structured delivery deals - it’s a hubris of investment and insurance. Southwest actually made money during the 2008 economic crisis through their fuel hedging, and historically have been among the most aggressive. Spirit didn’t have “investment” cash to effectively hedge against this kind of fuel price spike.
Any_Sale2030@reddit
None of the airlines hedge.
creade@reddit
Perhaps regretfully for them, Southwest ended their hedging program last year
abcpdo@reddit
Spirit never had any real hubs. Sure they had MCO, but try flying Chicago to LA via MCO.
scubastefon@reddit
It all comes down to fuel prices. While everyone in this business uses fuel, the way they structure their cost is different, e.g., whether they hedge using futures contracts, or options, or buy at market price.
Spirit didn’t hedge as effectively because they didn’t see a need to. They were expecting to be bought out but it never happened.
R0llTide@reddit
Who says JetBlue is on the verge of bankruptcy? Oh yeah, the founder who got fired for cause and is still salty about it.
SRM_Thornfoot@reddit
Because Southwest is not a low cost carrier. They just say they are and people believe it.
MosYEETo@reddit
The only reason they do is because they don’t use hub and spoke and only fly one aircraft type. Though you’re right, at their core they’re not a LCC.
Separate-Rhubarb7950@reddit
Southwest had fuel deals for decades, which let them charge less for tickets. Those ran out a while ago, so they have been having to changes what and how they charge.
SideEmbarrassed1611@reddit
Same reason Microsoft struggles while Apple and Amazon and Google don't.
Just because you are in the same industry does not mean you have competent management.
professor__doom@reddit
By charging more than the Big 3 and conning people into thinking they are still a low-cost carrier.
MilesHobson@reddit
I studied Southwest in B-School at great expense. My comment isn’t going to be free.
cyberentomology@reddit
Everybody studied Southwest in B-school.
jay_in_the_pnw@reddit
Not me, we studied FedEx!
jay_in_the_pnw@reddit
Probably won't be informed either!
Festivefire@reddit
Southwest is much closer in price to American Airlines than it is to Spirit. The era of southwest being a budget carrier is long over, they're a major operator these days.
Flounder719@reddit
Big overlooked thing during pre COVID when all low costs were making money Southwest wasn’t charging for bags or preferred seating and they were still making record profits. Turning on that $ source has been a big boost, something Spirit and JetBlue already relied on.
40KaratOrSomething@reddit
Southwest was bought out by a private equity group after a few rough years and has turned their model into a copy of United/Delta/American. They now nickel and dime for everything from seat selection to checked bags. Also, the fares are no longer low cost.
fly_awayyy@reddit
They don’t really nickel and dime I’d say. It’s just industry standard. Their fares were never low cost the bag fees were pretty much baked into the air fare. They turned the airline around from loosing money to making it profitable again. I’m sure all the employees there value that.
cyberentomology@reddit
No, it was not.
An activist investor bought a small stake (11%) in the company (and has since reduced his holdings to about half that, having cashed out some of his gains).
Southwest remains a publicly traded company.
Ryan1869@reddit
Southwest's business model is now more like United and American than it is a low cost now
fly_awayyy@reddit
Except they give you even less perks.
SwissMargiela@reddit
From personal experience, Southwest charges out the ass
BurtHurtmanHurtz@reddit
Any comment on here mentioning the PW engine issue is right.
Everyone else is just shocking bullshit.
dinanm3atl@reddit
WN over time seems to play the marketing game as a low cost option but hasn't been one for awhile. I have a little experience with them in terms of cost. Grew up on Delta. Used them for work. Tried AirTran and really liked it. WN buys them so tried to stay with them. End of the day over 12 months it was 10% more to fly Delta at the time. And get zero benefits. And a non existent partner network. Loyalty program isn't great for me. No lounges. Etc. So went back to Delta ever since.
End of the day they are charging real fares and operating like a legacy. Even more so nowadays.
pattern_altitude@reddit
Southwest isn't an LCC and hasn't been for some time.
sneijder@reddit
During covid there were desperate times for aircraft leasing, some start ups / airlines renegotiating managed ‘pay as you use’ deals, absolute diamonds of deals previously unheard of in most markets.
Fuel hedging properly can make or break an airline too.