By Allison Lampert,David Shepardson,Doyinsola Oladipo
Copyright reuters
SummaryCompaniesUnited CEO criticizes Spirit’s business model as failed experimentSpirit defends low fares and premium offerings against United’s criticismSpirit’s financial woes create market share opportunities for rivals
WASHINGTON, Sept 9 (Reuters) – A war of words between United Airlines (UAL.O), opens new tab and ailing Spirit Airlines executives escalated on Tuesday after the Chicago-based airline’s chief questioned the bankrupt discounter’s business model and expressed doubts if it could stay in the industry.
Minutes later, Spirit responded. In a post on X, the Florida-based carrier said its customers love low fares and its premium product offerings. “Maybe that’s why United executives can’t stop yapping about us,” the airline said.
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United’s CEO Scott Kirby has been a vocal critic of the business model of no-frills airlines and has repeatedly questioned their viability.
On Tuesday, he called the ultra-low-cost airline business model “an interesting experiment,” which has “failed.”
“And it seems unlikely to me that Spirit can keep flying because their customers dislike the airline and don’t want to fly,” Kirby told the U.S. Chamber of Commerce’s Global Aerospace Summit in Washington.
Spirit filed for bankruptcy protection last month for the second time in a year after a previous reorganization failed to put it on firmer financial footing.
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Its financial troubles have created an opportunity for rival carriers to grab market share.
Last week, United started selling tickets for new flights to 15 cities where Spirit operates. The company said its new flights were aimed at giving Spirit’s customers other options if the discount carrier suddenly went out of business.
Spirit immediately responded, dubbing United’s comments “wishful thinking.” The company said it expected to remain in business “for many years to come.”
To stem its cash burn, Spirit has been shrinking its operations and retreating from markets. It has discontinued service to 11 U.S. cities, including Portland, Oregon, and San Diego, and no longer plans service to Macon, Georgia, which was scheduled to start in mid-October.
Industry analysts and executives say Spirit’s troubles stemmed from its failure to fix its bloated cost structure. Its total operating expense in the latest quarter was $1.2 billion, which amounted to 118% of its quarterly revenue.
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Writing by Rajesh Kumar Singh; Editing by Mark Porter and Aurora Ellis
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