I Spent a Day Trying to Buy Spirit Airlines. Here's What I Found.
Why 44 million people flew an airline that they hated
When I saw Spirit Airlines had shut down, I called my investment banker.
Then I sent this slack to my partners Alex and Leila.
My team and I spent the better part of a day building the model, walking the repayment waterfall, and asking the one question that matters in any distressed deal: is the business broken, or is just the balance sheet broken? Two very different problems. Also, two very different price tags.
I made a full video on this. Before you watch it, here is the one number that reframed everything for me.
44 million people flew Spirit in 2024.
That’s insane.
Spirit was an airline that everyone publicly hated.
The airline had already filed for bankruptcy twice
An airline that had the worst fee optics
And 44 million people still flew it.
That told me that it just needed an updated business model.
But the big question is… how do you value a deal like this?
The Deal Anatomy Framework
I run every deal I analyze through 6 buckets of my deal anatomy framework.
Here is how Spirit looks through each one.
1. Thesis Conceptually…you are not buying an airline.
You are buying infrastructure: gates, routes, FAA certifications, reservation systems, and 34 years of operational knowledge. That takes a decade to build from scratch.
2. Catalyst The window was 30 days.
After that:
Gates get reassigned to other carriers
Pilots accept jobs at Delta, United, and Southwest and are gone for years
The FAA operating certificate has to be reapplied for if planes stop flying long enough
The asset was depreciating in real time.
3. Price and Terms The opening bid is $533 million.
That gets you the assets. It does not get you an airline that is actually operational. Restarting operations, rehiring staff, rebuilding fleet leases, and renegotiating gate access is a completely separate budget on top of the purchase price.
Meaning: “Winning the auction gets what’s left of the business. The restart budget actually gets the planes in the air.”
4. Capital Stack The repayment waterfall flows like this:
Aircraft lessors get paid first
Senior bondholders come next
Other creditors follow
Equity shareholders are wiped out completely
Hunter Peterson’s crowdfunding campaign raised $130 million in pledges. His Reg A structure caps at $75 million in actual capital. Against a $533 million opening bid, that is still a $450 million gap, before the restart budget.
5. Risk The risk nobody is talking about enough: even if the auction closes, getting a new FAA operating certificate and putting planes back in the air takes 12 to 24 months. Every day in that window costs money without generating a dollar of revenue.
6. X-Factor Every airline in history has treated passengers as customers.
Spirit 2.0, if structured right, could treat them as owners.
Passengers who own the airline tend to approach things differently. They tell their friends, and tolerate things they would otherwise complain about online. Think of it as a marketing budget built into the cap table.
I kept thinking:
“If 44 million people flew an airline nobody loved, what happens when people actually have a reason to root for it?”
If you liked this post, then you’ll like this one too:
