In this articleULCC your favorite stocksCREATE FREE ACCOUNTA Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.Joe Raedle | Getty ImagesFrontier Airlines is going after customers of Spirit Airlines, whose financial footing has gotten so shaky in recent weeks that it warned earlier this month it might not be able to survive another year without more cash.Frontier on Tuesday announced 20 routes it plans to start this winter, many of them in major Spirit its base at Fort Lauderdale International Airport in Florida.
Frontier overlaps with Spirit on 35% of its capacity, more than any other airline, according to a Monday note from Deutsche Bank airline analyst Michael Linenberg.Some of Frontier's new routes from Fort Lauderdale include flights to Detroit, Houston, Chicago and Charlotte, North Carolina.
It's also rolling out routes from Houston to New Orleans; San Pedro Sula, Honduras; and Guatemala City.Frontier had tried and failed to merge with its budget airline rival several times since 2022."I'm not here to talk M&A," Frontier CEO Barry Biffle said in an interview with CNBC on Tuesday when asked whether Frontier would buy Spirit.
Biffle said he expects that Frontier would pick up the majority of Spirit's market if Spirit collapsed.Read more CNBC airline newsSpirit Airlines warns it might not be able to survive a year without more cashWhy Delta and United are pulling away from the airline packHow much are Southwest's new assigned seats?
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Can he keep it going?Both carriers have struggled from changing customer tastes for more upmarket seats and trips abroad, an oversupply of domestic capacity, and higher labor and other costs.
Spirit's situation has become more dire however, after it emerged from four months of bankruptcy tection in March facing many of the same blems.Ultra-low-cost airlines are also challenged by larger rivals United Airlines, American Airline and Delta Air Lines that have rolled out their own no-frills basic economy tickets but also offer customers bigger choices of destinations and other perks onboard snacks and beverages.Stock prices of rival airlines surged after Spirit's warning earlier this month.Biffle said the carrier wants to become the country's largest budget airline and has rolled out loyalty matching grams to grab more customers.
Frontier's capacity was slightly smaller than Spirit's in the second quarter, through the latter had slashed its flying by nearly 24% from a year earlier, while Frontier was down only 2%.Spirit last week said it drew down the entire $275 million of its revolver and while it reached a two-year extension on its credit card cessing agreement with U.S.
Bank N.A., it agreed that it would hold back up to $3 million a day from the carrier.The airline lost $245.8 million in the second quarter.
Frontier lost $70 million.Spirit has been looking for ways to slash costs, including furloughing and demoting hundreds more pilots and cutting unfitable routes.
Hundreds of flight attendants are on unpaid leaves of absence.Spirit CEO Dave Davis said in an Aug.
12 staff memo after its "going concern" warning that "the team and I are confident that we can build a Spirit that will continue to vide consumers the unmatched value that they have come to expect for many years to come."The carrier reached a deal with bondholders who agreed to convert debt to equity in its Chapter 11 bankruptcy, but it didn't cut other costs renegotiating aircraft leases.
Leasing firms have been reaching out to rivals in recent weeks to gauge whether competitors would take any of the Airbus planes that are in Spirit's hands, according to people familiar with the matter, who asked to speak anonymously because the talks were private.— CNBC's Phil LeBeau contributed to this report.Don’t miss these insights from CNBC Morgan Stanley says nu power is gaining momentum, recommends these stocksWells Fargo hikes S&P 500 target as U.S.
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