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Jim Higgins: Jim Higgins, professor of aviation at the University of North Dakota.
Justin Siems: Aviation, what is going on? Welcome back to the Pilot to Pilot Podcast. My name is Justin Sims, and I am your host. Today's episode is not one that I was looking forward to. It's not one that I was hoping to ever have to record or ever have to happen, but Spirit Airlines is officially no more.
I think it was May 2 at 3AM. We just landed in Myrtle Beach and the maintenance guy was like, hey, look at this ACARS message. And we're like, oh, man. That's not good. That's not what you wanna hear.
My first kind of what I want everyone to know now is if you are a Spirit Pilot, feel free to reach out. Know, I don't know how much I can do, but I would love to see how I could help. Letter of recommendation, connections, whatever it may be, you know, just a person to talk to. I just encourage you to reach out to anyone that you know, whether it's for help getting a job or just to talk to someone, just to to have to have a friend. But in this episode, we we deep dive into spirit.
You know, Jim and I talk about what happened, how it happened, and kind of what led up to actually going out of business. And then we talk about what Spirit Pilots can do, information they should look for, historically, what has happened to Pilots. And we also talk about the hiring industry. What does it look like when there are 2,000 pilots that are gonna come into the hiring industry as well? But, aviation, I hope you're having a great day.
I hope you understand how lucky you are to if you still have a job and just try to help the spirit pilot if you can. I appreciate everyone listening. Without any further ado, here's State of the Industry with Jim Higgins. Jim, what's going on, man? Welcome back to the Pilot the Pilot Podcast.
Jim Higgins: Always happy to be here, Justin. Unfortunately, it's under some difficult circumstances, but thanks for having me back.
Justin Siems: Yeah. You know, this is something that's been talked about. Right? We have constantly just asked the question, is this really gonna happen? When could it happen?
And how did it happen? Right? Those are all the questions we we have been kind of bringing it up and talking about. And unfortunately, as we know, I was it May 2, I wanna say it was. I think it was May 2 because I remember I was flying in Myrtle Beach and we landed at like 1AM and we landed and we got to the ramp and they're like, hey, look, look at this A Cards message I just got.
Because Myrtle Beach has a decent amount of of, spirit or they did, I think. A couple gates. And it it said, we're ceasing operations at this time. And I was like, frick. Like that, like, just reading it.
I'm not even at that airline, but just reading it, you're just like, you know, just sunk your heart. You're like, dang, man. Like, I can't imagine what they're going through. Just thinking that this could be a place you could work forever. We talked off like some the the general public overall would bash on Spirit.
Jim Higgins: Mhmm.
Justin Siems: But any Spirit pilot that I've flown with, talked to, they will all say how much they love that carrier. They will all say how much they enjoyed working for them, and they wish they could have stayed there forever. They wish that they could have been there forever. These are people that might have left five years ago, two years ago, three years ago. Yep.
They all wish that they could it could have worked out for them in their whole career. That's how much they enjoyed working there.
Jim Higgins: Yeah. Well, look, you know, this is coming from the son of a two time furloughed Continental pilot. I know what it's like. I know the effects it can have on the family. This generation, we we really haven't seen anything like this in a while, and it can absolutely I mean, you're exactly right.
Our hearts go out to those folks. Let's talk about those employees. Let's talk about the Spirit Pilots because we've talked about this before a little bit, but, it's not a very well kept secret that this and I'm not just saying this because they've gone through bankruptcy and they've ceased to exist. But the pilots, for instance, at Spirit Airlines, they're widely regarded to be some of the better pilots in the industry. And we can look at some of the proof points for that, but, you know, not the least of which is you say whatever you want about the Spirit training.
You know, they do get some CPTs and some procedure stuff. But when it comes right down to it, they get four or five sims, in their initial training, which as you know is, you know, not a very many times. No. Gotta prove yourself. I personally have had some really good, really good friend friends who are really good pilots that did not make it through Spirit training.
And so I can tell you those pilots are among some of the more technically competent aviators out there that you're gonna find. And the other proof point is, I was recently talking to a director of training at a very, large airline, 5,000,000,000 plus, training budget to put it in perspective. So you can probably limit it to four or five. And, he flat out told me that they this is during the some of the layoffs and stuff before they went bankrupt, but but they love hiring Spirit Pilots because they get through training very fast. They have no extra training events, no extra IOE, and they're seasoned line pilots, you know, ready for the passenger operation and the and the flow of it.
And they just they're they're good employees. And so and that's that's that's just a one carrier. I've heard that from multiple higher ranking hiring people that will tell you the same thing that these are really good employees. My guess is is if those furloughed pilots, although this wasn't their plan long term, but if they want to go work for another good carrier, they'll be in a position to do so and Yeah. You know, go on to to have great careers wherever they go.
Justin Siems: Yeah. And this kind of leads to a different question that, maybe we're gonna think about later in this this podcast. Yeah. But what does the hiring market look like with this? Like, there's a lot of people that have been like, alright, cool.
Finally, you know, they're ramping up. Like, I've heard rumblings of Delta is gonna hire more. I've heard this. I've heard that. And they're like, cool.
This is my time. I'm gonna shine. Yep. And then, you know, all of sudden, boom. There's 2,000 I don't know how many pilots like actually got furloughed 3,500 around there Yep.
That are immediately available. Employable. And they Yeah. Employable. Available.
They already have one twenty one trading. They have three twenty one, three nineteen, whatever Airbus type rating that they have, and they're ready to go. So it's if you're an airline, like, are you just like scoop all of them up at once? Are you still putting them in buckets? Be like, alright, let's hire 10 Spirit guys and girls.
Let's hire these people, these people, these people, these people. Or you just, like, hire all the Spirit people until they're gone and then we'll go on from there?
Jim Higgins: It's a great question. And I think the answer is the old it it depends. So, you know, for instance, we were on tap for just north of 8,000 pilots hired this year, which would have been our third best year of major pilot hiring, you know, even even just just slightly behind some of our really good years of twelve and thirteen thousand. So it's going to be a really good year for pilot hiring, mostly on the basis of retirement. I do think that you were probably still going to see robust hiring.
However, the giant question mark now is the cost of oil. And it is putting pressure on, you know, it's going to start changing some long term plans of companies, which, you know, if this was if if the hires were for growth, I would say I'd be a lot more worried. These these this hiring for this year was primarily to replace retiring pilots, which, you know, probably means they're more than likely we're gonna see most of that hiring continue. But all bets are off as the cost of oil goes up. So we'll we'll have to see on that.
To your specific question, there are a lot of CJOs out there and, you know, conditional job offers and things like that, pools, whatever you wanna call them. So the question's gonna be if, like, a large airline that has a pool of a couple 100 pilots, if all of a sudden they have this great pool of Spirit Pilots available and they wanna hire a bunch of them, that may I this is total speculation. I'm not trying to upset any of your listeners. But, you know, just because someone has a conditional job offer, if they don't have their class date or even if they do, it's the airline's prerogative if they wanna change that to a later date and, you know, you know, aggregate or amalgamate some of these some of these Spirit Pilots in to get some of this experience, you know, and I'm not trying to be controversial, but if I was a hiring person at a United American Delta, I would absolutely wanna get these pilots here right away as much as as many as I can. I wouldn't necessarily look at, ratios, like 10 spirit to, you know, one.
You certainly wanna make sure you don't cut off any supply line, you know, just because that's bad for multiple reasons. But, I I think I would race to get as many of these Spirit Pilots that would wanna come and work for me.
Justin Siems: Yeah. It'd be interesting to see what goes on. Obviously, this is very fresh. Right? It happened three days ago.
So we don't know what the airlines are gonna do, how they're gonna react, how they're gonna hire. But I do know that there are websites that have been set up like, hey, if you're a Spirit Pilot, if you're a Spirit employee, like, here's a Delta website that's just for you guys. Like, this is how you apply. This is how what we can do to help you. And that alone goes with, you know, getting you back home or trying to get you where do you need to go if that didn't work.
But I know that they're looking at it and I know mean, you talk to more high up people than I do. I just kinda stay in my lane on my airlines, like, don't do anything, I promise. I'm not the Pilot Pilot guy. Yeah. But but I mean, why wouldn't you?
Right? Like, if you have people that have a proven good training record because once you get hired, the last thing the airline wants is for you not to work out.
Jim Higgins: We That's
Justin Siems: are gonna invest a lot of money. That simulator is very expensive. We are gonna pay you a good amount of money to be in training and we need you to pass. And Absolutely. Can we trust, you know, the spirit person's already passed shorter training, can they pass our extended training?
We're probably gonna go with them first. I mean, when you look at that on paper and you hear that, it's just like, wow, that actually makes a lot of sense. I understand that. But if you're the pilot that wants to get hired, that's maybe at Endeavor or at a regional or wherever you may be, you're like, crap, this thing is not good. Like, I can't catch a break.
Right?
Jim Higgins: Yeah. No doubt. It's gonna depend on your perspective, where you're at in your career. And certainly, there may be a little bit of a a delay if you are at a regional and you were expecting things to happen sooner. I I would just add, to like, I've always added this before.
You know, we tend as pilots sometimes just in just as humans, look at things that are in the next three to five months, maybe the next year. But the truth is we gotta look at this career over whatever time we have remaining till we hit 65. Yeah. And, you know, that's often decades yet, especially for a lot of these people at these regionals. And so, yeah, you know, there may there there may be, know, you there may be a little bit of a of a backup because of this, but you cannot blame the airlines.
And, your point about those websites set up, the other thing is is, you know, check check. Alpa is gonna have a lot of services available that, you know, they'll try to negotiate. I mean, there have been in the past, not necessarily direct hires, but certainly hiring preference, programs for furloughed ALPA pilots at other ALPA carriers and even other union carriers, you know, like Southwestern American that maybe they're not alpha, but but they'll they'll certainly be open to that. It's kind of a win win there. The only group that maybe is a little bit put off is a group you're talking about, which are the aviators that are kind of in the supply line that weren't expected this.
Again, though, if if we were gonna hire 8,000 this year because we we were on tap for it and we, we have to, bring in, you know, two well, let's say fifteen, eighteen hundred. I think there's 2,000 pilots on the seniority list there, but not all of them are gonna wanna go on to a one twenty one. So the ones that do the fifteen, eighteen hundred, it's still three months of, you know, delay. Maybe it's not in the grand scheme of things. It's, in my opinion, not gonna be huge.
Justin Siems: And the one thing to remember too, if you are the person that's out of regional or feel like you're getting stuck for even longer, it's like, at least you're getting stuck and you still have a job. Right? You're still getting These people do not have a job. So, I know it does suck, but it would suck even more to not have a job. So it's hard to to really complain when that comes to that.
Yeah. Absolutely. So I kinda wanna get into I mean, we we have speculated, not speculated, we have talked about what is going on with Spirit. What kinda led them to where they are today. I think it's important to note that this wasn't just like a a one off thing with the oil.
Right? Like this this was from what I think I read, I think it was six years in a row of not having a profit. Whether it was just the way the industry just changed. Right? Consumer demand, the what they wanted out of an airline might have changed, or it could have been some other stuff.
But it wasn't like the oil change is exactly what like the only thing that that put them out. It pushed it over. Right? Like this is certainly what sped up the process. But, it's just from your point of view, looking back on, I guess we can go back like COVID, till now.
What really was it that kind of, put the nail in the coffin and really expedited this?
Jim Higgins: Great. This is gonna be kind of lengthy, so, you can you can stop me if it gets too too technical or whatnot. But you're right. You know, first, we have to look at the low cost carrier business plan. You know, as I mentioned several podcasts ago, might even been a couple years ago, I thought that that business plan I used to be a big believer in it.
I thought it was getting exposed a little bit, because the the main reason for that is is the Deltas, Americans, and Uniteds started offering their basic economy fare. So they actually started competing. And now you had one of these mainline trunk carriers with these big hub networks competing on price. And and that that I think was one of the first great difficulties for this business plan. As you know, I it was also a year or two ago or actually right as Spirit was considering its first bankruptcy.
I was pretty harsh on the Spirit management. So I do think that there was some mismanagement there because at the time, all airlines are making a lot of money except for them. And so that whenever that happens, have to say you have to take a look at the management, and say maybe there was a problem there. But we can also look at the fact that Spirit recognized early on along with JetBlue that, hey, we probably are gonna need to do something pretty dramatic. Let's increase our size.
Let's merge. We all know what happened there. The DOJ opposed it. And eventually, the federal judge, I forget his name, but I know a lot of people know it. No reason to say it here.
But he thought he was doing quote unquote a solid for the Spirit passengers by not letting them merge. And in fact, now here we are, you know, in that situation. And so and and who knows? If they would have merged, who who knows if that would have been a a you know, if it would have been a a good position or not. Then we fast forward to two a series of two chapter 11 reorganizations.
And they were successful in that, the airline was able to arrange dip financing, that's debtor in possession financing from the creditors and bondholders, which is a spectacular feat because it doesn't always work out. But they were able to convince the people who to whom they owed debt that they were they had a viable plan, they were gonna get their money back, and the airline was gonna survive. They're able to do that twice, which I gotta tell you when you asked me about this when they went in the second bankruptcy, the second chapter 11 reorg, I said, jeez, I haven't seen this before. That's pretty odd. I don't know how that's gonna work out.
But to their credit, they emerged. They actually started recalling Pilots Mhmm. And they actually had a pretty solid heartbeat. And then lo and behold, we know what happened with oil in the last little bit. And the problem what so why did oil why was the oil the coup de grace that that that pushed them across the line?
It's because they had no wiggle room. They they had no resiliency left because they'd already basically had the defibrillator hooked up twice with the with the shock that got them back in. They just weren't gonna survive another one. I do get this question a lot. You and I talked about a little bit of it offline is is why didn't the bailout work?
You know, we all know that the federal government tried to come in. Excuse me. There are different numbers that are are proposed on, you know, what what was the deal. The only people that really know what the deal was were the people negotiating But somewhere between 200 and 500,000,000, whatever the case may be, it was a bailout plan. Why didn't that work?
Well, don't ask me how I know. But when a business goes into bankruptcy, the fiduciary responsibility of the board, which makes the long term strategic decisions of the organization, it shifts by law. It shifts from the shareholders and the employees to the credit holders, the people that they owe debt to. So that that point in time, the board has to do what's best for the people that owe the debt. During the two this is a little bit of speculation on my part, but I'm pretty sure this is what happened.
During the two reorganization bankruptcies, the bondholders put lots of protective covenants and provisions on their, you know, their their reorg plan saying, okay, we'll agree to this if, you know, basically, we're gonna perfect this debt. We're gonna be the first lienholder on this aircraft tail number, whatever. And so they basically had they basically had their principal covered. So if all of a sudden Spirit went out of business tomorrow, they'd be able to extract a big portion in in assets. There's enough liquidity there that they would at least get a big chunk of this back.
When that 500,000,000 or the 200,000,000 bailout package came in, my guess is it came with some pretty onerous covenants that basically would have erased or eviscerated some of these preferred lienholders from the previous bankruptcies. You have to get them to agree. They have to consent to that. And my guess is they took out their calculators and said, you know, even if we bring this money in, there's you know, my interest is just to get my money back for my my my maybe it's a private equity company, maybe it's a bank, maybe it's a leasing company, capital company, but they have these debt they have this debt on the books. Their job is to get that money back, and they did the calculation that there was enough in aircraft, routes, gates, whatever.
There was enough there that they'd be able to liquidate to get that money back. And so they rejected they rejected the plan of the bailout. And again, I don't know the details of of what it was. My guess is is the warrants, or the equity or whatever the pieces were. A warrant is an option for an equity at a later date.
You know, it's it's it's, you know, pretty pretty advantageous to the acquirer. So, you know, and and so my guess is they put some pretty healthy preferred in there and they took first position and it just wasn't palatable to the others. Sorry to be so long winded, but for those that were wondering, I'm almost positive that's what happened.
Justin Siems: Yeah. I mean, from from the deal that I think has been shared publicly, which I mean, pieces of it have been shared publicly, was up to $500,000,000 and I think also up to 90% in equity of the company, which you would think 90%. They'd be like, alright, yeah, that's not worth it at all. Like Right. Our investor just wants their money back.
Like, we're not worried about what happens in six years or five years. We just wanna get out of this. So, yeah, you'd think they'd be like, alright. No. We're good.
You know what's interesting? You mentioned this before. It's like how they were able to secure the funding two times in bankruptcy. I was listening to a podcast. It was Wall Street Journal, and she the the reporter, she said that she got off the phone with the CEO of Spirit not too long ago.
And he was I mean, this is he's supposed to be like this, but he was very adamant that their plan was going to work. Mhmm. Like, he believed in the plan that they had and they really thought that this was this was gonna work. And I would hope that's what my CEO would say, but, know, there are a lot of people that are in those positions that they they just, you know, they don't really believe in the plan. But he truly truly was like dying on the hill, like, this is gonna work until the oil just shot up.
Jim Higgins: Well, I think that's probably true. You are right. The CEOs in general are supposed to be bullish because it helps the share price. It gives the shareholders confidence. So you're right.
Sometimes when a CEO comes out and says, you know, this plan is gonna take over the world, you have to have a healthy dose of skepticism to judge that. However, Spirit was doing something with their checkbook that backed up what the CEO was saying and that they were bringing pilots back off furlough, which is very expensive because it does all kind of training churn and, you know, you're not gonna do that unless you have a high degree of confidence you're gonna need those pilots. So I do think that checks. I do think that that CEO probably truly believe that. And look, I mean, you know, you and I talked about this a little bit.
We're not gonna name names, but but if fuel if if the cost of oil stays where it's at right now, there's going to be problems down the road. I'm not trying to instill fear in everybody. I'm not going to name, you know, who I think. I had a colleague of mine do a pretty deep analysis on this And we agreed not to name names. His name is Brian Dils.
He's on the he's a faculty member, associate professor at UND. Great guy, great industry, you should have him on sometimes he's had a great career flew the triple seven for Emirates, I think. Great guy. But he's deep analytical guy and he took a look at this and, you know, if we don't get this oil price under control or or if it if it gets to too high of a level, there's going to be other problems in the industry more than likely, you know, assuming that, you know, there's not good responses from the industry. So so we don't we don't need this this $100 oil.
We certainly don't need a $150 oil. If you get $200 oil, it's going be very difficult to to operate for any any foreseeable future for many out there. So, again, I'm not trying to sound panic. Hopefully, this goes back to a nice equilibrium and we can get back to normal and, you know, not have to worry about that.
Justin Siems: Yeah, man. It's like it feels like COVID was not long ago where we were going through the the bad part and now it's like there's just I mean, not like you said, not like throwing out like it's gonna be like that, but like there's the potential that things could go down, that that could happen. And what's really interesting is the way you hear the other airline CEOs talk about this. We talked about in the last podcast, so Ed Bastian from Delta, he was like, you know what? Whenever oil does this, things happen.
There's a lot of consolidation. Airlines don't make it and it wasn't like speculation as far. It was like just matter of fact. Then you read into all these other press releases and they're all very coy in how they're worded. Like, they're all like, well, we can't comment on this.
We're used they would be like, nope, that's not gonna happen. But now it's more like, they're not you can read what they're not trying to say, if that makes sense. Like you can go like read between the lines and you're like, okay, well, this wasn't worded this way before. So, everything just feels open ended and I don't know. I don't think I don't know necessarily if that means major mergers or if it means major changes, but they're all definitely thinking about stuff and working on stuff and talking about stuff, I'd imagine.
Jim Higgins: Yeah. You know what's interesting? We have had some black swan events, COVID being one, you know, some of these other things. But if you go back into the sixties, seventies and particularly after '76 when we went into deregulation, the airline world entered the industry entered a very capitalistic compressed business cycle. So we would constantly have bankruptcies, consolidations.
We would constantly have furloughs, layoffs, strikes, all kinds of acrimony and instability. And it is better by any measure nowadays. There's a lot more stability because airlines have learned how to make money for the most part. Not, you know, obviously, not Spirit in this case, unfortunately, but but most of them have solved some of that. But we are seeing some some weird external factors like COVID, like the Boeing issues that we saw with the with the MAX and the Airbus engine issues, and now a little bit with the the cost of oil, you know, going freakishly freakishly high in a short period of time.
These are shocks that, we probably hadn't seen some of this in the past or expected it. It's kinda hard to plan through it, but it is in fact creating somewhat still better, but a somewhat similar environment to what we used to see in the eighties, nineties, and February where people kinda ride that. And so it's too bad. I I hope we can get this, worked out sooner rather than later.
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And as I mentioned before, right, this the age that we're in right now, you know, people experience COVID, they experience that, but then they experience, like, the immense high after COVID of the the crazy pay, the crazy hiring. Previously, you know, you would have these really, really lows and then it'd just be sucky for forever. Right? Like you you go on any airline message board like, oh, well, you know how you didn't like being short call reserve for three months. I was short call reserve out of base for twelve years.
It's like there's this this other world that the current generation doesn't really understand that is a possibility that it has been like this. And you don't want it to go back to that. No one does. But that world does exist. You know, that that did happen.
It could happen again. And I think that the older generation is kind of just like, oh, boy. Here we go. Like Yeah. But, let let's hope that's not true.
Jim Higgins: Nope. I I agree. You know? And what can you do if you're entering the industry now? If you're in the industry, you're getting near the end of your career?
You know, all of those you probably there's there's well, one, there's not a whole lot you can do. Right? When you go to choose the place that you're gonna go work at, whether it's a major airline corporate, whatever whatever it is, all you can do, and I tell my students this all the time, no nobody has that magic crystal ball that says what's the industry gonna look like twenty, thirty years from now. Nobody knows. Yeah.
So all you can do is make the best decision that's for you and your family at that particular moment in time based on all the available information. And know that there's a chance that you're not gonna necessarily retire at that dream job that you that you're getting. You know? And so so that's okay. You just have to be flexible.
And, you know, when the times are great and the pay is really high and those bonuses are out there and profit sharing's out there, that's great. Take that. You know, work with, I know one of your sponsors, Allworth work. Work with those folks to squirrel away some money so you can withstand some of these shocks that are inevitably gonna come from time to time and not worry about it. Well, of course, you're gonna worry about it, but but you'll be able to withstand it and put yourself in a in a good position.
I'm not trying to lecture pilots, but and I think we're better about this from a fiscal management point of view per personal finance. I personally think every every pilot, probably every human out there should take a personal finance course and learn about compounding interest, learn about but, you know, one of the lessons we can always take from times like this is you can't always rely on your employer to provide a paycheck. So make sure that or certainly your retirement. So make sure that you do stuff yourself to put yourself in a position especially when times are good and you're making a lot of money. Make sure you put yourself in a position that you can, you know, withstand these things and, you know, thrive.
Justin Siems: Yeah. As someone who's been, you know, heavily involved in unions and has has either seen from afar or like you mentioned your dad was furloughed when he worked in the airline industry, What is it that unions can provide for those Spirit Pilots and also what is it for other pilots? Like, how can how can people help? How can what can Spirit Pilots do next? Like, who should they reach out to?
I'm sure, obviously, their own union but like, what it what what happens? Like, what happens to that pilot? Like, paychecks. Right? Like, there's no airlines, so there's probably no paycheck for the work you did.
Just talk about that scenario.
Jim Higgins: Yeah. Well, you know, hopefully, there's enough during the bankruptcy. Hopefully, there's enough assets to pay off the creditors. The employees are pretty high up. They're not ahead of the secured creditors, but they're pretty high up in the pecking order for repayment.
There's a federal amount. I think it's the max is, like, 18,000 in until, you know, what you get and then the other creditors kick back in. But there's a good chance you'll still get paid, I would think. I I guess I haven't looked at the complete balance sheet of of Spirit, but I think there's a pretty good chance that a trustee will figure out how to get some of that money back. Same thing with the passengers that are looking for some of their refunds.
I think I think that some of that will happen. It may not be on time, but the first thing you're gonna do, Justin, is you gotta dust yourself off. You're probably gonna go through a grieving process where you're kind of in denial, and then you switch to the anger. And then eventually, you gotta just you gotta realize that you're a great asset to this industry. You're super employable.
You know, even if you're 62 years old and you just got furloughed from Spirit, you are super employable even if it's not at another major airline. Although, certainly, if you look at some of the in incoming classes, people do get hired at that age. But even even if you don't wanna go there, there are gonna be corporate opportunities and things out there and you're super employable. So just dust yourself off, get your head back in the game. In the case of, ALPA, ALPA, I know I I haven't seen this, but I know this is what they've done in the past.
They will provide lots of resources. I'm sure they've already set up a website. They're gonna do their best to negotiate direct hire programs. I'm sorry. Maybe not direct hire, but but preferential hiring, programs, things like that.
And, also, you know, our industry, we take care of ourselves. We take care of each other as best we can. You saw, even though it was one of the worst days professionally for a lot of these spirit, people, you know, whether it's a flight attendant, you know, pilot, whomever. You saw the rest of the industry step up as best as they could to help get these Pilots home. You know, KCM was pulled almost immediately.
And but but still, the everyone out there worked really hard to get these Spirit Pilots that were out of position, a seat in the back, and, you know, got them home as quickly as possible. And you have to just applaud each other. I'm sure you saw the story of the gentleman who actually was his last flight.
Justin Siems: Oh, Southwest. Yeah.
Jim Higgins: Southwest. High
Justin Siems: five Southwest, man. That was awesome.
Jim Higgins: That really cool.
Justin Siems: They did that. Yeah.
Jim Higgins: Yeah. And so things like that, you know, they give they give you hope that, you know, that that we all take care of each other. My guess is is if you have friends in this industry that work for other airlines, and even if they're not super good friends, but you let them know you're from Spirit and you're laid off, I I would bet money that 99 out of a 100 of them will walk your resume in or do whatever you need to do to to get you a job somewhere else.
Justin Siems: Yeah.
Jim Higgins: So so yeah. It's a it's a gut shot. It's horrible. It makes you doubt things. You know, it's gonna be a normal human condition to sit there and say, gosh, maybe I should have looked for a job earlier.
I never saw this coming. You know what? Like I said earlier, you gotta base your decision on what's best for your family at that time. You you know, we all thought we were cheering for spirit. We all thought that, like, CEO that things are gonna work out.
No one saw this oil thing coming. You can't blame yourself. Right? You just gotta this this is just sometimes the the churn of of the machine. So, you know, dust yourself off.
Get your head back in the game. You'll be okay. It really doesn't matter where you're at. There there are gonna be opportunities for you, you know, in term and one thing to remember and I I maybe we said this earlier, maybe we didn't. If not, I think it bears repeating.
Spirit Airlines failed not at all because of the employees of Spirit Airlines. Right. These are some of the best employees. You know, we talked about the pilots, but but you have to look at the maintenance. You have to look at the dispatch.
You have to look at all of the craft classes, there. As you know, they had an impeccable safety record.
Justin Siems: Yeah. That was thirty four years. Right?
Jim Higgins: Yeah. And not a lot of not a lot of airlines that have operated for over thirty years can say that. You know? I mean and so so you gotta really tip your hat. They did everything they could.
They took concessions and they needed to take concessions. They did everything they could to do their part to keep this airline going, and they can hold their heads high to know that, they were much more part of the solution than, you know, part of the devastating loss that resulted. So, know
Justin Siems: Yeah. Agreed. And I know this doesn't, like, help in the current moment. Right? Like, hearing those things or being told, like, you really never know if you made the right or wrong decision until you turn 65 because who knows now you could get hired by this other airline that turns into even better opportunity but it's like, yeah, this still sucks for this three to six, however long it takes for that hire to happen.
And even then it's like, alright, well I lost ten years of seniority, I lost fifteen years seniority. So it's just It's extremely unfortunate. Like we said, know, our heart goes out to everyone. I don't know many people at Spirit, but if you know me, you know, you can always reach out to me, DMs, email, whatever. I will write a letter of recommendation, do whatever I can do to try to help.
And there everyone in the industry would do the same. So, my my only word of encouragement is just to reach out, you know. Yeah. We we want to help if we can. I don't know how much help we can be, but, know, we we wanna help as much as we possibly can.
Jim Higgins: Yeah. Absolutely. I do have friends that work for Spirit and I have not heard from them yet. I'm sure they're still processing everything.
Justin Siems: Yeah.
Jim Higgins: But my heart does go out to them. There's no doubt. You know, one of the other things I I forgot to add to your earlier question is there's undoubtedly going to be special job fairs that are created for the Spirit Pilots. You know, maybe some of them haven't, you know, polished their resume in a while or they haven't gone through the interview process. As you and I know that is not for the faint of heart either.
Yeah. You're employable, but you still have to get across the finish line. So take take advantage of those opportunities as well to go out there and and and, you know, get get your get your head back in the game, your heart back in the game and Yeah. You know, who knows? Yeah.
You're gonna lose some seniority. Yes. It's it's there's no doubt. There's really no way to to look talk about the upside right now. But I will tell you in a few years, if you get a good job somewhere else at a carrier that's, you know, kind of figured out the business models correctly and there's a lot of them out there, You know, you will be okay.
You'll be doing what you love to do, which is fly aircraft, which is something you're very good at. You're gonna get through training no problem because you've already proven that, you know, at at Spirit. And so you'll be okay and you just gotta you just gotta do that. And one last little piece, you do have to talk a little bit about the mental health component. I know that's been a popular thing to talk about but, know, when Alpa did a survey on stressor events for Pilots, and I'm sure this holds across many industries.
But, you know, death of a child was, of course, you know, the most devastating event, you know, separation, divorce, things like that. But right up there near the top was loss of job. It's an extremely stressful emotional event and, you know, it doesn't make someone a weak person if they need to talk to somebody. My guess is the EAP at Spirit still exists, but if not, there's gonna be other programs out there. My guess is if you called Alpa Aero Medical, you know, they would have some resources for that as well.
It's part of your union dues to support that. We have to take care of each other and, you know, don't be afraid to get that addressed because, you know, as pilots, we often define ourselves by our job because, you know, we're kind of, you know, little miniature CEOs in our own domain with very important jobs with lots of responsibility. When that gets taken from us, it can really have some devastating effects on our, you know, emotional well-being. We just have to be ready to to deal with that.
Justin Siems: Absolutely. Yeah. I mean, that's really well really well put and it's important to focus on the mental health aspect of that because, you know, you're more than just a pilot, you are a person. But we get caught up in so much in the identity of of what we do just kind of bleeds into our life. Everyone's like, oh, she's a spirit pilot, he's a spirit pilot, they're a pilot, they're this.
When that gets taken from you, you know, we we thought about this in some in COVID too. When that gets taken from you, when it's no wrongdoing of your own, you know, that could really affect you and could, put you in a spiral. So like you said, it's it's definitely worth reaching out. Just just taking the opportunity to be like, hey, whether it's a friend, whether it's a colleague, it doesn't have to be a therapist. But like if you feel comfortable doing that and you do it the right way, then yeah, go reach out.
Jim Higgins: Yep. Absolutely. Yeah.
Justin Siems: I do wanna talk a little bit about the response that we've seen from other airlines because I think it's kind of important to see. It really I mean, I don't know if I should be surprised but it it didn't take very long for for some some new routes to be named, right, for in certain markets and certain airports. Were you surprised to how quick maybe a certain airline jumped in on this or, do you kind of mock it up to like they had they have to do what they have to do to survive themselves?
Jim Higgins: Yeah. Look, It's a harsh part of a laissez faire capitalistic economy when there's an airline death like we're seeing here. There certainly is capacity there that has to be absorbed by the system. So the other remaining carriers are gonna set they I guarantee you every single one of the one twenty one carriers out there has looked at this probably for the last year and have had contingency plans ready to go. I think we saw that with JetBlue and they're moving to the Fort Lauderdale, Miami area.
I think they were ready to go because they saw exactly because, you know, lot's gonna you can't just go to some place and take a new route. You have to look at where you're at, what your resources are, where you can do stuff, and they saw they saw an opportunity there. Now is it gonna work out? I don't know. There's pretty smart people that work in those, those operations folks, those course planning, fleet planning folks.
They're they're high IQ people generally. So my guess is they've run some pretty good simulations and models. Yeah. And there probably will be some capacity that's soaked up soaked up by them. There's no doubt.
And it is it's tough to talk about because it's kinda like, you know, the vultures are moving in, but but in you know, those passengers still have to be moved from point a to point b. Spirit, as we all know, served they they they basically some people will say, not to get emotional about it, but some people will say they democratized a lot of air travel because they brought it down to a lower economic price point that made air travel available to a large part of the population that maybe normally wouldn't have had that made available. And so those people, need to be they need to have that still available. And I think there gonna be companies out there that will be able to to still service them, you know, in the wake of this.
Justin Siems: Yeah. Another part of that is, were you surprised there wasn't more of a reaction from other airlines? Or do you think it's still in the
Jim Higgins: works? Well, so so a great question. Like, one of the questions I've I've had is, why didn't another air carrier come in and do do their own merger acquisition? And there's 9,000,000,000 reasons why that didn't happen. That 9,000,000,000 is the debt.
Because whenever there's a merger acquisition, the first thing that has to be addressed is, you know, how's that gonna be restructured and and paid or how's, you know, how are those people that own the debt and you get paid first. That's the first thing that's gonna happen and nobody could figure out a way to do that. In fact, I think Scott Kirby was recently interviewed. Are you gonna buy some of these Airbuses and some of these other things? He said no because the well, he said the configuration which I'm sure is true.
It's a lot of money they have to spend on each aircraft. And I'm sure American and Delta and all the other Airbus operators are are looking at the same thing. But I also think that a lot of those, a lot of those aircraft are gonna have to be liquidated, and there's gonna probably be some decent deals on that. And I think you're gonna see some of the other airlines step up and and and and take some of that. But Yeah.
That's the reason why I think some of the airlines didn't didn't get involved. Even the merger, which was several years ago when the debt wasn't quite as high, but it was still high. Even the merger through JetBlue and Spirit, you know, it it it still had some big debt problems with Spirit's debt. It was it was not a slam dunk that this was gonna, you know, be the pathway to the promised land at all. And so, I mean, I it they would certainly would have had a better chance.
And, you know, I've been very critical of the DOJ and the judge and you you and I have talked about this before. They should have been given the chance to do it. In my opinion, we're either deregulated or we're not. You know? If we're not deregulated, then just come out and reestablish the civil aeronautics board and, you know, reregulate the entire industry.
So you either have to let you you can't you can't ideas.
Justin Siems: Yeah. Yeah. Ideas. Alright?
Jim Higgins: Crash that. No. Don't let that make the final edit.
Justin Siems: Yeah. And the same podcast I listened to earlier about for the Wall Street Journal about what happened. She mentioned that Duffy reached out to every single airline multiple times. It was like, can you please buy them? Yeah.
Can you please help us? And they're like, no. It doesn't work. And he said he went back to he went back to JetBlue like three times. Still like, are you sure?
Are you sure? And they're like, yeah. We we cannot do this. Like, this is not gonna happen.
Jim Higgins: Yeah. 9,000,000,000, it was just it was just too much of a debt because as soon as you I mean and I know some people have asked, well, what about structuring? Well, well, let's say let's say Duffy brought 500,000,000 reasons to do it. You know, you're still looking at 9,000,000,000 in in debt. And, you know, especially with the uncertainty of the cost basis because of the increase in in oil, there's not gonna be a carrier that's gonna take a chance.
Look look at probably you can make these arguments, like, who who's the most, financially well, that's a bad way to put it. What what airline has the most wood to burn? Right? When you look at the the probably, you know, on the passenger side, it's you know, probably Delta. When you look at the cargo side, it's probably UPS.
But but there's a lot of really good carriers. Not to say other carriers aren't in that position, but I'm sure they looked at it. I'm sure they looked and and there's no doubt they're probably gonna want some of the gates. They're gonna bid on some of the gates, some of the routes, some of the if there's any international routes that were awarded.
Justin Siems: Yeah.
Jim Higgins: But as far as a wholesale acquisition of someone with of a company with 9,000,000,000 in debt, I just it's just really gonna be difficult even for a carrier like that to to overcome that. And so, yeah. I
Justin Siems: also think it's worth noting about when you mentioned the airplanes, a lot of those airplanes have bad engines that aren't that are being very expensive and I don't even know if they have fix for them. Like, I mean, it was just very because one of just the the many cuts that led to where spirit where they are right now.
Jim Higgins: It didn't help, did it?
Justin Siems: A lot of bad luck. Yeah. What was I gonna say? Oh, I have one more thing I wanna talk about. Oh, my gosh.
What is it? 930, 1030 now. We're rolling, man. We're rolling. My last thing that I kinda bring up, what So what happens next?
Like, I mean, we talked about gates, we've talked about airplanes. What's the process for this? Like, does it just say creditors are gonna lessors or creditors be like, hey, we have 10 gates at O'Hare, who wants it? Bidding starts at 200 or $20,000,000 or is it go through the government? Like, how does that work?
Jim Higgins: Well, here's something that should send should you know, so the creditors didn't approve the deal, the bailout deal. And so they're thinking they're gonna be able to liquidate. The one thing that they may not have thought about, I think it's called a February bankruptcy. I know there's a lawyer out there listening saying no, it's not that. But what it is, it's a special type of bankruptcy typically with chapter seven but others where you go into a liquidation, but a bankruptcy judge and a trustee, they have the ability to strip the company of all debt and take the IP or some other things and just sell it to the highest bidder.
Now the money still comes back and pays off in order, but, you know, there's not gonna be many many winners in here. But what's gonna to your question, let me let me before I get into the the nuance like that, the trustee and it's sometimes in these real complicated bankruptcies, it will be a company or a or a firm. But, but the trustee will come in, and their job is to take care of the creditors first, right? So they're going to say, okay, let's look at all the perfected debt, who owns what, who has a lien, sometimes it's a lien by end number, sometimes it's a lien on, you know, ground equipment, whatever the case may be. And they'll spend several months and they will liquidate.
They'll liquidate usually on an auction. They'll liquidate to leasing companies. There'll be a glut of these Airbuses available. There's no doubt about it, you know, for the next eighteen months to two years. So that's gonna, you know, it's not gonna be good for the price point necessarily.
But their job is to liquidate, get as much money as they possibly can. By the way, don't realize this. Trustees are incentivized. They get a cut of whatever they bring in. So and it's it's a federally mandated cut.
Don't know. I want to say it's like 5%, I I could be wrong. But, you know, you bring in a billion dollars. That's a pretty good day for that trustee. A long business issue.
Maybe I I actually now that I think about it, I think as it gets higher, it gets less and less of a percent. But but it's still they're still incentivized. Yeah. I know. But they're still they're still incentivized.
It's been a long time since I've looked at that. And I'm certainly not an attorney or a bankruptcy attorney. It's a it's an and this is even within bankruptcies. These types of bankruptcies, these complex chapter sevens, these large companies. It's a specialized bankruptcy group of attorneys.
I'll even handle this. So there's lot of lot of nuances there. But that's what's going to happen. And it's gonna be a process that probably takes well over a year or two to get everything finally liquidated. You know, you can follow along, if you want.
It's called PACER, which is the federal government's, you know, tracking system for bankruptcies and actually, all things. It painters all things, criminal and, you know, court cases. But you can follow along specifically this bankruptcy, and you can see the different filings that are made by the trustee and how the trustee is proceeding and what's being sold next and where the auction is if you wanna go buy an a three nineteen, you know, something like that.
Justin Siems: It's gonna be really interesting to see, you know, how it all plays out. Right? Like, what what happens to to their some of their main bases where it was I mean, look at Detroit and so it was Delta and Spirit. They had really big presence there. So does Delta just go all like, just take over even more?
Is that even allowed? I don't know if if that's the process of it or is another airline like United's like, well, hey, we can we can get more gates now. We'll a pain in Delta's butt, you know. Or look at BWI too, massive spirit. Right?
But that's also massive Southwest. So Southwest gonna go on. It's just it's really interesting to see what's gonna happen. I mean, it's it's a wild time to be in the aviation media. That's all I'm gonna say.
It's, they're giving us a lot to talk about. So we might be seeing Jim and I more often than we want to. Might go back to COVID when we were talking like every other week. Right. So, it it could get it's gonna be interesting to see how it all plays out.
But Yeah. The moral of the story, the moral of this whole episode is if you know a Spirit Pilot, reach out to him. Just say hi, like, just just be there for him, let them talk, let them not talk, but just let them know you're there. And it just sucks. Like, no one wants to see this happen.
And it can happen to anyone. Right? Like, you think your airline's safe now, but we've all seen how cyclical this is. We're all seeing when Delta wasn't doing well. We've all seen when United wasn't doing well.
We've all seen when any the airlines aren't doing well. Yeah. And they're able to get out of it. And unfortunately, Spirit wasn't, which is That's great. Is really unfortunate.
And timing, yeah. Bad luck, yeah. It just sucks. It could be any airline, which is awful. Don't want that to happen.
So let's hope for for oil that comes down because like you said and what your, your buddy ran, it seems like there are other potential issues that could pop up. Now, we don't know what those issues could be. Yep. But, higher expenses, especially in oil, is not something we wanna see. So No.
Jim, I appreciate your time. I hope if you're listening, this was somewhat beneficial. If you are a spirit, but like I said, I know my buddies at Spitfire, they are putting on some webinars, consulting to help you get hired, to to figure out how to get your resume back up, to figure out how they can get you in front of faces and and people. So I know there's there's resources out there. Pay attention to what Union's saying and just, you know, if anyone says anything can help, just jump on it.
You never know who could actually help you and put you in the seat of your next class. So Well said. I wish you all the best. Thank you all so much for listening. And, Jim, I appreciate you, man.
Jim Higgins: Anytime. Thanks, Justin.
Justin Siems: Yeah. Be careful saying that. You never know. I'm gonna call you tomorrow and be like, hey, we gotta talk now.
Jim Higgins: Yeah. Well, hopefully, it won't be because of another bankruptcy. But Yeah.
Justin Siems: Any any Yeah. Well, yeah. I'll tell
Jim Higgins: you that.
Justin Siems: Well, Jim, thank you so much, Hope you have good day.
Jim Higgins: You too. Thanks, Justin. Alright.
Justin Siems: See you. That's a wrap on today's podcast. Thank you so much for listening. Like I said earlier, if you know a sphere of pilot, reach out. See how you can help them.
I know in the aviation world, it's a very very tight brotherhood and sisterhood. So reach out and help if you can. But aviation, I hope you're having a great day. And as always, happy flying. The Pilot to Pilot podcast is brought to you by Ground School from the Finer Points, the indispensable training app for new and experienced pilots.
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