Spirit Airlines’ Rolls Out The Red Carpet After $160 Million Loss

Spirit Airlines, the go-to for cheap flights with a catch, is making some changes. We all know the Florida based company for their “pay for every little thing” approach—bags, seat choices, even water. Crazy isn’t it? I remember the good old days when I got a full meal on a flight without forking over an extra cent.

Let’s get back on track. So, Spirit Airlines is trying to step up their game with a new tier that aims to add a little more comfort to your budget-friendly journey (emphasis on "a little").

Drumroll please—Say hello to the “Go Big” package! While it won't exactly land you in a first-class pod with a personal stewardess, it does get you a roomier seat up front, free Wi-Fi, a checked bag, a carry-on, and “unlimited” snacks and drinks (including the adult kind). This is Spirit’s version of rolling out the red carpet, and it might just be what they need to climb the ranks with premium airlines like Delta and United. They’ll offer four fare levels, from the all-inclusive Go Big to the bare-bones Go, where you’re lucky if you get a smile from the flight attendant.

As you may already know, it hasn't been all smooth flying for Spirit. They recently warned that their latest quarter's losses will be over $160 Million because their usual money-makers—those add-on fees—weren't pulling in as much cash as they’d hoped. It seems people are getting pickier about what they'll pay extra for and that’s why Spirit is trying to adjust their vision.

What’s surprising is that Ryanair, Spirit’s European cousin, isn’t immune to the struggle. Despite a bump in passengers of 74%, their profits took a 46% dive. The culprit? Lower fares.

(Source: Agenzia Nova)

Here’s the unexpected twist: Even though travel is booming this summer, with the industry eyeing nearly $1 trillion in sales, ticket prices have actually dropped. In the U.S., airfare prices are down 5% compared to last year. Delta's CEO even called out budget airlines, asking them to quit stuffing planes with cheap seats.

Unlike their more upscale cousins, low-cost airlines like Spirit and Frontier can’t rely on plush business and first-class cabins to pad their profits. Instead, they’ve turned to flooding the market with cheap seats to rake in some extra cash and keep their planes full. It’s been a win for passengers who love a bargain, but it's wreaked havoc on the airlines' bottom lines. It reminds me of the time I had the grand idea to pay extra payments on my mortgage with pocket change—-effective, but painfully slow.

With these lower fares and higher costs squeezing profits, airlines like Spirit are banking on offering more choices to passengers. By expanding to four different tiers, Spirit hopes to appeal to a wider range of travelers, from those looking for the cheapest deal to those willing to splurge a little for extra comfort. Even Southwest is getting in on the action, planning to introduce assigned seating so they can charge extra for prime spots.

At the end of the day, it's all about giving passengers more options and, of course, more ways for Spirit Airlines to make money. Whether you're just looking to get from point A to B or want a few extra perks along the way, there’s a seat for every budget—and a fee to match. It’s gonna take a lot more than this to to help their stock price considering shares are trading 82% in the negative for the year.

Stocks.News holds positions in Spirit, Delta, Southwest, and United.