Spirit Airlines, the privately held low-cost carrier in the midst of a costly fleet transition, has changed hands. The airline, based near Fort Lauderdale, said that Bill Franke, the Phoenix-based investor who had controlled America West Airlines in the 1990s, would become board chairman.
Franke's venture capital firm, Indigo Partners, took a stake in Spirit earlier this year and has now increased it, reducing Spirit's controlling investors, Oaktree Capital Management, to minority shareholders. Oaktree put another tranche of money into the carrier as Indigo came in, bringing its total investment in Spirit since 2004 to $195 million.
The carrier, which specialises in vacation routes to Florida and has embarked on an ambitious Caribbean expansion, has been losing money steadily, racking up $110 million in deficits since April 2004. Its survival plan rests on replacing its MD-80 fleet with Airbuses - a transition that began with Oaktree's 2004 investment.
But the move has been costly as Spirit struggles to pay for pilot training on the new fleet while it is still saddled with its gas-guzzling MD-80s, and its domestic routes face intense price competition from JetBlue and Southwest. The executive guiding the transition, Ben Baldanza, remains chief executive following the retirement of one of Spirit's earlier investors in May.
Baldanza has vowed to complete the fleet rejuvenation this year, but the carrier has previously struggled to meet such commitments. However, Baldanza envisions a future public stock offering, a goal he believes the Indigo investment will hasten.
Indigo also has stakes in Hungarian low-fares carrier Wizz Air, and in Singapore-based Tiger Airways. Franke also heads investment group Newbridge Latin America, which specialises in Central and South America - the focus of Spirit's growth, with 12 of its 30 routes to Latin or Caribbean points. ■
Source: Airline Business
