Jeremiah Burton, a 45-year-old air conditioning technician, paid about $500 late last month for his first flight ever, a Spirit Airlines run from Baltimore/Washington International Thurgood Marshall Airport to New Orleans to meet his daughter's newborn twins. He told CNBC he found the ticket by typing "the cheapest airline ticket" into Google. He flew Friday, hours before Spirit shut down at 3 a.m. Saturday and 17,000 direct and indirect employees lost their jobs. His scheduled May 6 return will not be on Spirit.
Two days on, the post-shutdown machinery is grinding through. Spirit said on its website that "Refunds for tickets purchased by credit card and debit card have been issued, and will be processed by Spirit's credit card processor," according to The Verge. Six rivals have absorbed the stranded with capped fares, and new detail has emerged on why the Trump administration's $500 million rescue collapsed: bondholders refused to subordinate their claims to Washington.
Why the rescue failed
The deal floated in the final 48 hours would have advanced up to $500 million in federal financing in exchange for warrants equivalent to 90 percent of Spirit's equity, The Verge reported. The structure required existing bondholders to step behind the U.S. government in the capital stack. They refused. Commerce Secretary Howard Lutnick called Chief Executive Dave Davis to tell him there was no deal and that bondholders and the government were far from an agreement, a person familiar with the call told CNBC. Bondholders then sent a letter to Spirit's board confirming the end was near.
Refund pipeline
Customers who paid with a credit or debit card are being refunded automatically through Spirit's processor, the company said. CBS News travel editor Peter Greenberg told CBS News Boston that "If you're holding a Spirit ticket for a flight that hasn't happened yet, you'll get that back from your credit card company under federal credit laws." Eric Rosen, director of travel content at The Points Guy, told CBS News passengers should "call the credit card you used to buy the ticket and dispute the charge" if the automatic refund stalls. Customers who paid with cash, vouchers or Spirit points will have to wait for the bankruptcy process, Spirit said.
The traveler view
United Airlines rebooked about 14,000 Spirit customers on Saturday, the carrier said. Southwest Airlines took in more than 20,000. JetBlue is offering $99 one-way rescue fares for 72 hours. Frontier Airlines added nine routes and 15 daily flights across 18 former Spirit markets. Henry Harteveldt, founder of Atmosphere Research Group, told CBS News the rescue fares "may be less expensive than the normal fares these airlines would charge, but would probably be more expensive than the Spirit fares."
The Verge and CBS News tie the timing of Spirit's collapse to jet fuel prices that climbed from a $2.24-per-gallon assumption in its restructuring plan to more than $4.50 last month, roughly a doubling tied to the Iran war. Frontier, Allegiant, Avelo and Breeze face the same fuel curve but were not carrying Spirit's debt load or its grounded Pratt & Whitney PW1100G engines.
The capped-fare windows are the next deadline. Southwest's fares expire 11:59 p.m. CDT Wednesday. United's run through May 16. After that, the 4 percent of U.S. seats Spirit flew, per Cirium, reprice at whatever rivals charge.