Why Spirit Airlines’ Bankruptcy May Spark Mergers & Kraft Heinz Splits

Summary

Brew Markets Daily – September 2, 2025

Episode: Why Spirit Airlines’ Bankruptcy May Spark Mergers & Kraft Heinz Splits

Host: Ann Berry
Podcast: Brew Markets (Morning Brew)

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Overview

In this episode, host Ann Berry dives into two major developments shaking up the market: Spirit Airlines filing for bankruptcy for the second time in less than a year and Kraft Heinz’s decision to split into two independent companies. The discussion explores the implications of these events for the companies, their industries, and investors, and considers the role of key figures like Warren Buffett. Insights on current stock movements and policy uncertainties round out a packed episode.

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Key Discussion Points & Insights

1. Spirit Airlines' Second Bankruptcy & Industry Ramifications [00:03–04:50]

• Spirit Airlines has entered bankruptcy for the second time in 10 months.

  • Triggered by an unexpected lease termination affecting 37 aircrafts (25% of Spirit’s fleet); future aircraft deliveries have been cancelled (36 more leases for 2027-28).
  • Recent efforts at revival included hiring CEO Dave Davis, cost-cutting, revamping the loyalty program, and launching a premium economy option.
  • Despite these moves, Spirit suffers from high operating costs and soft demand, undermining credibility with lessors.

• Host’s analysis: Without a merger or acquisition, Spirit likely faces further collapses.

  • “There’s no real way for Spirit to do things differently without a deal. Scale is the airline player's friend. And Spirit just doesn’t have enough scale today or the cash or credibility to get bigger anytime soon.” (Ann Berry, 02:39)
  • Noted past failed deals: JetBlue (blocked by DOJ for anti-competitive risks, 03/2024) and a rejected offer from Frontier while in bankruptcy (02/2025).

• Bankruptcy costs and impacts:

  • Expensive restructuring: $30M spent in Q1 2025 on bankruptcy professional fees alone. (03:58)
  • Staff anxiety: looming furloughs for 270 pilots, shrinking operations, and high employee uncertainty.

• Fresh regulatory environment:

  • Berry posits that the DOJ under the new administration might revisit prior stance and take a broader view of merger consequences, weighing “disruptive harm if the deal doesn’t happen” as much as anti-competitive outcomes. (04:27)

• Market response:

  • JetBlue shares nudged up, Frontier shares soared 15% anticipating market share gains from Spirit’s ongoing distress.

Memorable quote:

“If the definition of madness is doing the same thing over and over again and expecting different results, then the stakes are high for Spirit to prove its sanity and come up with a plan to do things really differently this time.”
— Ann Berry, [00:13]

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2. Kraft Heinz Split: Mega Merger No More [05:36–13:22]

• Kraft Heinz announces split into two companies:

  • Spreads, sauces, and seasonings group ($15B sales/year): includes products like Heinz ketchup and Philadelphia cream cheese.
  • Grocery products group ($10B revenue/year): Oscar Mayer, Lunchables, Capri Sun.

• Historical context:

  • The 2015 merger (Kraft + Heinz) championed by 3G Capital and Warren Buffett’s Berkshire Hathaway, valued at $45B, was meant to harness megascale efficiencies but disappointed.
  • Berkshire now owns 27%—Kraft Heinz shares are down 63% from merger day; $8B write-down in 2019 underscored brand struggles.

• Industry-wide shakeout:

  • Other packaged food giants have faltered: Campbell Soup (down 25% YTD), Hormel (down 20%), ConAgra (down 30%).
  • Shifts toward healthier eating, rise of GLP1 drugs changing American diets; processed, shelf-stable brands losing appeal.

• “Shrink to grow” narrative:

  • Companies are breaking up to concentrate resources and appeal to evolving consumer preferences.
  • Recent similar moves: Kellogg split into WK Kellogg (cereal) and Kellanova (snacks)—both then quickly acquired (Mars and Ferrero).
  • Example from Ann: “A little bit going after the market that Celsius, for example, has had so much success in. So again, this, this narrative is companies breaking themselves up to focus in order to grow.” [09:02]

• Skepticism and Buffett’s perspective:

  • Warren Buffett spoke out on CNBC, doubting the split will fix Kraft Heinz’s problems. (13:02)
  • Ann Berry adds a cynical take: splits and IPO talk often signal a “For Sale” sign to the market.

Notable quotes:

“It does feel a way to to break this down into pun intended bite sized chunks for someone to come and buy.”
— Ann Berry, [12:12]

“By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand.”
— Kraft Heinz Chairman, quoted by John, [10:18]

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3. Who’s in Charge at Berkshire Hathaway? [13:22–16:20]

• Listener Q&A: Who runs Berkshire Hathaway as Buffett plans departure?
  • Warren Buffett remains CEO until Dec 31, 2025; succession has long been planned—Greg Abel to assume CEO role January 1, 2026.
  • Market uncertainty: Berkshire’s stock dropped 4% on Buffett’s transition news.
  • Buffett’s enormous influence continues—his comments move markets (e.g., Kraft Heinz down 7% on his criticism).
  • Buffett will remain board chair, largest shareholder (30% stake), and key influence post-retirement.

Notable quote:

“At this point, Warren Buffett could live on a hut on a mountain, running absolutely nothing, watching soap operas all day and the market would still pay attention when he speaks because that's what happens when you're iconic and have been for decades.”
— Ann Berry, [15:45]

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4. Market Recap and Headlines [16:38–18:51]

• Indices: Down ~1% for the day.
• Standout stock moves:
  • Frontier Airlines up 15% (biggest beneficiary of Spirit’s woes, per Deutsche Bank).
  • Gold and silver hit record highs; Newmont and Barrick Mining up 1%+.
  • Cytokinetics jumps 40% after a promising clinical conference.
• Policy flashpoint: Uncertainty from questions on legality of Trump’s “Liberation Day” tariffs—Supreme Court decision pending could mean refunds for tariffs collected if overruled.

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Selected Notable Quotes with Timestamps

• On Spirit's predicament:
  “Spirit just doesn't have enough scale today or the cash or credibility to get bigger anytime soon.”
  – Ann Berry, [02:39]

• On Spirit’s bankruptcy cost:
  “It spent nearly $30 million for that three month period alone just on professional fees. Read lawyers and restructuring advisors. That's cash just going out the door that absolutely does not find its way to better services or fares for customers.”
  – Ann Berry, [03:58]

• On Kraft Heinz strategy:
  “They are really putting out really fancy for sale signs, right? They're saying we're for sale or open to something different without actually saying it.”
  – Ann Berry, [12:45]

• On Warren Buffett's ongoing influence:
  “Warren Buffett will keep his 30% ownership. So he's an incredibly important shareholder. He's also going to remain chair of the board. And guess who the CEO reports to. Long live Warren Buffett, who will keep running the show.”
  – Ann Berry, [16:12]

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Segment Timestamps

| Segment | Timestamps | |--------------------------------------------------------|--------------| | Spirit Airlines Bankruptcy & Merger Speculation | 00:03–04:50 | | Kraft Heinz Split: Reasons & Fallout | 05:36–13:22 | | Who Really Runs Berkshire Hathaway? (Listener Q&A) | 13:22–16:20 | | Market Recap & Headlines | 16:38–18:51 | | Final Thoughts on Tariffs & Market Uncertainty | 17:30–18:50 |

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Conclusion

This episode provides sharp, timely analysis on two market-shaking events: Spirit Airlines' deepening crisis and Kraft Heinz’s breakup, while offering context on changing consumer preferences and investor attitudes. Ann Berry’s candid commentary, supported by timely data and memorable quips, makes the episode accessible and insightful even for those who missed the original.

Transcript

[A]

Kraft Heinz splits into we unpack why at Berkshire Hathaway, who's in charge? And Spirit Airlines. Will its new bankruptcy ignite an old deal for Tuesday, September 2, 2025 is Brew Markets Daily and I'm Ann Berry. More market details to come. But first, Spirit Airlines has entered bankruptcy again. And if the definition of madness is doing the same thing over and over again and expecting different results, then the stakes are high for Spirit to prove its sanity and come up with a plan to do things really differently this time. To set the stage, Spirit has just filed for bankruptcy for the second time in 10 months. This time triggered by a, quote, unexpected lease termination on 37 current aircraft. This effectively grounds around 25% of the ultra low cost carriers fleet. Plus another 36 leases were pulled on jets that were set to arrive in 2027 and 2028. Switching off growth now, it was only in March that Spirit emerged from the last bankruptcy process, which started in November 2024. The company spent six months reducing debt, hiring a new CEO, Dave Davis from Sun Country Airlines, to steer its new capital structure and focusing on cost cuts. Now, since his arrival, Spirit has announced a bunch of changes that includes a revamped loyalty program, new new inflight menus, new services from Savannah, Key west and Chattanooga, amongst others, launching a premium economy travel option and selling excess gate capacity. But even before the aircraft leases were terminated, and this is coming to the heart of the issue, Spirit has been plagued by high operating costs and soft domestic travel demand, making it just less credible as a counterparty on the other side of those leases, the landlord effectively of the jet saying, don't think you guys are going to make it. Now, my view, the only way out to prevent a third bankruptcy, I think this company has to merge or get bought. And here's the problem. There's no real way for Spirit to do things differently without a deal. Scale is the airline player's friend. And Spirit just doesn't have enough scale today or the cash or credibility to get bigger anytime soon. Now, in February, while still in bankruptcy protection, Spirit turned down a more than $2 billion offer to be bought by Frontier Group. Front Frontier had been wooing the company since 2022. Now before that, in March 2024, JetBlue abandoned a $3.8 billion attempt to buy Spirit after the Justice Department blocked the deal on the basis that it risked, quote, anti competitive harm. So here's my view. Spirit says we're going to just pull up a list that while it's working things out, its customers will experience flights that quote, continue to operate normally and that customers can keep using tickets and credits and loyalty points. I. E. Spirit's trying. It's business as usual. But here's the problem. It's not and it shouldn't be. Now employees are understandably in high anxiety. They just don't know if their jobs are going to exist months from now. 270 pilots will soon be furloughed, so routes will be affected and bankruptcies are just wildly expensive. If we look at what happened in the first quarter of this year when Spirit was still going through restructuring, it spent nearly $30 million for that three month period alone just on professional fees. Read lawyers and restructuring advisors. That's cash just going out the door that absolutely does not find its way to better services or fares for customers. So here's why this all caught my eye. Other than the fact that the headline obviously is pretty eye catching. I think there's a new vibe at the Justice Department under the new administration and I suspect it will take a fresh look at the deals that were blocked in the past. And in this case, would the airlines really drill down into what harm means? Not just the risk of anti competitive harm if the deal does happen, but the disruptive harm if one doesn't. Now JetBlue shares nudged up today and Frontiers absolutely soared 15% as the market bets that both would scoop up market share while their rival struggles through the distraction and the lift of bankruptcy. And a Spirit cuts capacity. Now as for a merger, which in my view is a way to really lock down more market share, well, my guess is that a deal is increasingly likely, which is why we are going to keep watching this activity. Stay with us for more on what's next in the food industry and a nod to Warren Buffett's birthday. But first, if you want to do more in Investing, check out Public.com, brew Markets Daily is sponsored by Public Now. Before the show, our producer John was going through the features on Public to try to decide which one to talk about today.

[B]

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[A]

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[B]

Full Disclosures and Podcast Description Another day.

[A]

Another announcement of a major shakeup in the food sector. Now this is one that was rumored earlier this summer and today it was officially announced that Kraft Heinz, one of the largest packaged food sellers in the world, plans to split into two separate companies. Now, Warren Buffett isn't happy. We'll get to that. But first, John, take us through what these companies are are going to look like.

[B]

That's right. Well, one company will be made up of sauces, spreads and seasonings. So that's like Heinz ketchup and Philadelphia cream cheese. And that unit currently generates over $15 billion in sales. And the other will be comprised of grocery products like Oscar Mayer hot dogs, lunchables, Capri sun, all those familiar brands. And that unit currently brings in over $10 billion in revenue.

[A]

So two big companies are going to be split out. The one mega company, Kraft Heinz. And just to sort of set the stage, let's go back in history a little bit. Kraft Heinz was created 10 years ago, merger of, yes, Kraft and Heinz. And it was a mega deal orchestrated by two incredibly influential investors, 3G Capital and Warren Buffett's Berkshire Hathaway. Now the idea was that by bringing these two together to create Kraft Heinz, operating on a large scale would fuel efficiencies. That means getting cost savings and procurement, getting the benefits of scale and distribution, negotiating leverage with the grocery stores, reduced overhead, all those kinds of synergies. Now the deal at the time the merger happened again, that was a decade ago, was a $45 billion move. It created the fifth largest food and beverage company in the world. But the merger hasn't been successful. And this is especially true for Berkshire, which today holds 27% of the equity in Kraft Heinz. It's the biggest shareholder. And if you go back, John, and look at what happened even as early as 2019, Warren Buffett actually went on CNBC then and said his company had paid too much for Kraft. And in February that year, nerds like me digging through the financials could actually sort of see it in black and white because the company took a more than $8 billion write down in the value of the craft and Oscar Mayer brands. And so just to sort of bust through that jargon for a minute, literally you had accountants and actuaries going through and saying no. The brand equity, its ability to resonate with customers, its ability to generate income and return is dropped. And so an $8 billion write off off of a $45 billion deal is pretty meaningful. Now, if you look at the share price of Kraft Heinz Today, it's down 63% since the merger. Its market cap as of earlier this afternoon hitting $30 billion. And look, John, it's just not been alone. We've seen a couple of other issues here.

[B]

That's right, Campbell stock, they're down 25% year to date. That's the soup and beverage company. And they're reporting earnings tomorrow. So we'll see how they stand. And there have been rumors of a Campbell split as well. Hormel, of course, they make the chili and spam. Its stock is down 20% this year. So businesses are struggling and they've been giving a few reasons why. And consumers are shifting away from iconic, highly processed, shelf stable brands, and they're looking for healthier options. Plus, with the addition of GLP1s into American culture, people's diets are changing.

[A]

But ConAgra actually came and said that explicitly. Right?

[B]

Right. They said, by the way, their Stock is down 30% to date.

[A]

Join the club. Yeah.

[B]

And so they're looking for healthy snacking businesses. In June, they sold off Chef Boyardee, van de camps, Mrs. Paul's. Those are all those processed, iconic meal brands.

[A]

And again, just sort of listening to that, the shift towards the healthy consumer, identifying that customers just want to have, you know, different things in their pantries. You know, when we actually went back and we dug through several of these deal announcements to look at the reasons why these huge food entities are claiming that they are breaking themselves up, one of the things that really struck me is this idea that these businesses are looking to focus resources. They're shrinking to focus and therefore hoping to shrink, to grow as a reward for that focus. Now, we saw it recently with a deal that we discussed in the show a little bit earlier, which is the tie up coming between Keurig Dr. Pepper and JDP's, the Big Dutch Coffee Company. And these two businesses are literally merging in order to turn around and break up. They're getting married to get divorced. One company to spin out to focus on coffee, the other to spin out to focus on the sort of indie brands, higher, growing, slightly more glamorous energy drinks and niche soft drinks. A little bit going after the market that Celsius, for example, has had so much success in. So again, this, this narrative is companies breaking themselves up to focus in order to grow.

[B]

And that's what we heard today from Kraft Heinz chairman who said by separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand.

[A]

Well, exactly. And so the question is, what are these resources? So one is capital, right? If you're going to become the CEO or CFO of these independent businesses, it's trying to figure out what, which other brands do I go buy, for example, to try and add to the portfolio. So it's not just attention, it is literally a capital allocation exercise. Now, one other place, another deal that's had a similar thesis. 2023, when Kellogg spun off its cereal business as WK Kellogg and then put it snacking brands, which includes the very delicious Pringles, because I enjoy Pringles and Cheez, its into Kellanova. Again, the narrative there from leadership was, quote, both businesses will be better positioned to focus on their distinct strategic priorities, meaning different consumer preferences, different growth trajectories, different capital requirements. And then if you're a public company investor, if you're a shareholder, different return on your investment, different expectations about dividends, for example, versus growth.

[B]

But what happened after they split up? Both of those companies have been acquired. Mars is buying Kelanova for 36 billion. And Italian candy maker Ferrero International is buying WK Kellogg for 3.1 billion. So is it to focus on both sides of these disparate companies or is it maybe to spin out for acquisition?

[A]

Well, it's interesting. So I'm going to sort of infuse a little bit of cynicism here. And I was actually delighted to find I'm not alone in cynical because Warren Buffett Just again, 27 shareholder, biggest shareholder in Kraft Heinz, went out and told CNBC today that he does not think that splitting the packaged food giant into two entities will solve its problem. And so that's when I put my hat on John, as someone who's been around these deals and would work on them early in my career, we used to say that when companies put themselves out out there as potentially going public, filing for an IPO or announcing they're going to split itself into two, they're really putting out really fancy for sale signs, right? They're saying we're for sale or open to something different without actually saying it. And I don't, I couldn't help but think there's an element of that here, the CEO of Kraft, Heinz Abrams Rivera said the board didn't discuss or contemplate the possibility of either new company being acquired by a private entity. He even went so far as to say they could be the acquirers themselves and go and guzzle up lots of brands once they're separated. But I really couldn't help think is there actually a world in which quite quickly we see either if not both of these businesses getting sold? Not least because when I think about the way you described, John, some of these were going to be sort of sources and spreads and some are going to be grocery staples. They all have in common. They're processed foods in the grocery stores. You know, I don't think that there's a massive difference in growth outlook for either of these two sets. It does feel a way to to break this down into pun intended bite sized chunks for someone to come and buy. Let's take a quick break. When we come back, who is in charge at Berkshire Hathaway? John, we have a question from the audience.

[B]

That's right. We heard from Sam in New York and they wrote and how does Wall street view Warren Buffett's current position? He made headlines talking about his disinterest in railway mergers, but Berkshire Hathaway shares dropped big on him stepping down as CEO. Who is running the show?

[A]

Sam, I love this question so much that I'm going to answer it in three different ways. So here's the first technical answer and then I'll get to the fun one in a minute. So Warren Buffett is still CEO of Berkshire Hathaway and he will be until December 31st. He announced in May that he would step down at the end of this year. Now, when he made the announcement, you're right, Berkshire Hathaway's stock price dropped by 4%. Now, shareholders cannot have been surprised that at his grand age, Buffett turned just turned 95 on Saturday that he wants to slow down a little. And we've known for four years who his successor, Greg Abel table will be. But markets don't like uncertainty. And as thoughtful and deliberate as Buffett has been about training able to replace him, Berkshire's founder has been at the top for 60 years. So life without Warren there is inherently uncertain. But Sam, as you point out, Buffett's words still move markets today. As we just saw, KRAFT Heinz down 7% on news that he's not a big fan of this deal. Last week, railway stocks did indeed drop when he disclosed that Berkshire Hathaway is not interested in buying more rail assets. It owns bnsf. And on hearing that two of its key competitors would be merging, the market speculated that BNSF would itself merge with player number four. Now, as we discussed in our episode last week, Buffett nixed the rumors, nixing hopeful share pops in the sector alongside it. He is, after all, still the boss and in this case, still the C.E. no. Now here's the fun answer. At this point, Warren Buffett could live on a hut on a mountain, running absolutely nothing, watching soap operas all day and the market would still pay attention when he speaks because that's what happens when you're iconic and have been for decades. A September 2024 poll by Benzinga revealed that 58% of Americans would trust Warren Buffett to invest their life savings. He is the longest serving public company CEO in the United States. He's not known as the Oracle of Omaha for nothing. And finally, my cheeky third answer to your question. When Greg Abel sits in Buffett's CEO seat on January 1, 2026, he is going to see a familiar face at work. And that is because Buffett has made it very clear he will be going into the office, still keeping a close eye on the company he's built to a $1 trillion market cap. Extraordinary. And who shares he clearly has stated he will not sell. Warren Buffett will keep his 30% ownership. So he's an incredibly important shareholder. He's also going to remain chair of the board. And guess who the CEO reports to. Long live Warren Buffett, who will keep running the show.

[B]

And if you have a question for Ann, do like Sam did. Send an email or Voice memo to.

[A]

Brewmarketshoworning brew.com we are heading into the closing bell. It's 4:00pm on the east Coast. That's the markets finally shutting down for the day. We don't have a ticker tape, so let's throw it over to our human ticker. John.

[B]

That's right, all the indices today were down about 1%. And some market headlines and Deutsche bank may have heard your first story today. It said Frontier Airlines is the biggest beneficiary of Spirit Airlines second bankruptcy filing in a year. Shares of frontier were up 15%. Gold and silver recorded record highs this week as investors hedge market rate cuts. And personally, I went shopping for a wedding band this past weekend and gold up over 40% since last year. It's getting more and more expensive for me to put off getting married. Shares in companies mining for gold and silver also up. Newmont and Barrick Mining Both up over 1% and finally, shares of cytokinetics were up by more than 40% after a weekend medical conference made investors more optimistic about the biotech experimental heart drug. The drug is scheduled for FDA review in December.

[A]

Don't we just love how our producer John just slipped in there? He's getting married. Stay tuned for that because I'm absolutely announcing to the world when, when the date rolls around. Now, final thought. There was some big news that sort of snuck into the markets today, but really was a big driver for that tick down that we just heard John take us through across the equity indices. And that is that the U.S. court of Appeals for the Federal Circuit in Washington has questioned the legality of President Trump's Liberty Liberation day tariffs. Now, U.S. treasury Secretary Scott Bessant quickly came out yesterday and says that he is confident that the Supreme Court will uphold these tariffs. They are going to stay in place through October 14, which does give the Trump administration a chance to file an appeal with the Supreme Court. There's even a question around how those tariffs that have already been collected could be refunded if indeed it turns out that these tariffs put in place again, these Liberation Day tariffs since April turn out not to be upheld by the Supreme Court. So this is going to keep evolving. We're going to keep watching this one. As we all know, the one thing the markets does not like is uncertainty. What a chunk of uncertainty to kick off our September. That's it, folks. That's all for today's Brue Markets Daily.

[B]

Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarek Abdelatif and Emily Milian. Our technical director is Uchena Waugu and the president of Morning Brew Inc. Is Devin Emery.

[A]

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.