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Spirit Airlines Grounded by Bankruptcy & New FCC Threatens Big Tech
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Spirit Airlines files for bankruptcy & new FCC may be trouble for tech companies
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This episode is brought to you by US Cellular. Don't sacrifice a great experience for a great deal. Now with US Cellular Prepaid, you'll get a new Samsung Galaxy A15.5G free without the hidden fees you get with other prepaid providers. So you can use U.S. cellular's nationwide 5G coverage without sacrificing anything. Terms apply. Visit us cellular.com for details.
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Good morning Brew Daily Show. I'm Neal Freyman.
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And I'm Toby Howell.
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Today, how Spirit Airlines went from industry disruptor to Chapter 11 bankruptcy.
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Then who is Brendan Carr, Trump's new pick to lead the FCC? It's Tuesday, November 19th. Let's ride.
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Good morning. It is great to be back here in the studio with you, Toby, and with you, our wonderful listeners. Anyone tuning in from Utqiagvik Alaska. If so, I do not envy your next two months in this city. 330 miles north of the Arctic Circle, the sun set yesterday at 127 local time and it won't rise again until January 22nd for 64 days. Residents there will be living in what's known as Polar Night. Makes you feel a little bit better about the sun setting at 430 here in the evening hours.
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But here's something to remember. Over the course of the year will actually experience the exact same amount of daylight as any other place on earth. So if we Fast forward to May 11, 2025, the sun will rise in Utic and it won't set until August 19. So there is a life lesson in there somewhere. Even though you might go through periods of extended darkness or extended sunshine, it all evens out in the end. Now a word from our sponsor, Yahoo Finance. Neal, do you have a stock market group chat?
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Does a one legged duck swim in a circle? Of course I do. Now are all the ideas thrown around there good? Probably not.
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I think a lot of people can relate to that. Everyone wants to know where to put their money in the market, but most people resort to listening to their friends who despite their best intentions might not be the most informed stock pickers out there.
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And that is why you should augment the collective knowledge of the group chat with something like Yahoo Finance. Instead of just vibes, you can read up to date reporting and leverage real time market data to make more informed decisions.
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You don't have to shun the group chat, just make sure you're also looping in some Yahoo Finance in there to keep Jack from your freshman year co ed flag football team honest to see.
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More of what our purple prince has to offer. Head to yahoo.finance.com that's yahoo.finance.com well, pour.
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Out a water the flight attendant charge you for because Spirit Airlines filed for Chapter 11 bankruptcy protection yesterday after years of headwinds finally caught up to the budget airline. So many things had to go wrong to lead to this moment. A merger with JetBlue that fizzled in January, engine problems that grounded part of its fleet, an inability to operate, profitability in a post pandemic inflationary environment. That time when they said my carry on bag was too big. These all contributed to two and a half billion dollars in losses over the past five years and a failure to turn a profit since 2019.
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The airline did come out and assure customers that it expects to continue to operate normally now and in the future. So if you forgot to book a Thanksgiving flight home, you can still look their way. Its stock is a different story, though. After falling over 90% so far this year, Spirit is going to delist from the New York stock exchan change as it sorts through total debt listed at $9 billion. Toby, you already laid out some of the reasons why Spirit struggled to compete in the airline industry. But what do you think ultimately sank it?
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It was my carry on bag fiasco, obviously. It was clearly small enough to fit in the seat in front of me. No, it was a variety of things. Interestingly enough, though, demand wasn't really the issue. Spirit flew 2% more passengers in the first half of this year than in the first six months of 2023. But the airline took almost 20% less revenue per mile. It was just hard to compete with the industry writ large. It was kind of caught in what we call the messy middle. A lot of US Airlines offer that maximum cheapness ticket tier where it's very bare bones, you know, no boarding, no boarding privileges, and just very basic economy seats. But it also couldn't compete at the higher end of the spectrum too, with more luxury characters like Delta that people were clearly gravitating towards post pandemic. So it just was the worst of both worlds. Even though more people were flying, it, it just couldn't reliably charge those passengers enough money to operate profitably.
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Yeah, I mean, there was a price war in the airline industry over the past few years. There was too much capacity. It doesn't serve international markets that are a higher margin for the carriers like Delta and United. And it was, I think of it as the Snapchat of the airline industry. First of all, it's yellow. But also it introduced a lot of innovative features. Remember, if you go back to 2006 when it introduced this ultra discount budget model, it kind of took the airline industry by storm. It was super successful. The concept of just paying $60 for a one way flight and charge, you know, just maybe carrying a backpack was quite revolutionary at the time. The problem is the Facebook of the, of the airline world decided to just copy it. And then at the same time they also offer a lot of other things that make them money. So in the context of this price war, Spirit lost because it just couldn't charge enough. And it did try to make moves to compete with the big guys. You know, earlier this year it decided to roll out four different bundles of fares that you could do. It came with something that somewhat resembles first class, where you can board more quickly, you can have more refreshments, it comes with a few more perks. But it does seem that that was a little too little too late.
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It really was that Spirit was almost too powerful a force in the airline industry that ended up sinking it because Spirit pressured others to keep their fares low or pressured others to innovate and offer those lower fares. And that the, the fact that they could exert that pressure was part of the reason why the Justice Department overthrew or successful lawsuit that prevented the JetBlue Spirit merger on the grounds that losing Spirit would harm the consumer. Losing Spirits low fares would harm the consumer. But then everyone was saying, look down the road a little bit. Spirit is struggling. If we don't let this merger happen, you probably might lose Spirit to bankruptcy anyways. So it is one of those things where the Justice Department was right, that Spirit is this down, exerts this downward pressure on prices because of the fares it offers. But the fact that they blocked the merger made it so that Spirit has like this murky path forward going into.
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The future that again, Spirit's not going anywhere. They're going to refinance their debt. They're going to emerge from bankruptcy, it looks like in the Q1 of 2025. And pretty much every airline that exists today has gone bankrupt. The big guys went bankrupt after nine. Eleven airlines have filed for Chapter 11 more than 180 times in recent decades. So this is just something you do as an airline. You go through bankruptcy, bankruptcy, and then hopefully you come out a healthier company on the back end. But this hasn't happened for a long time. It hasn't happened in 13 years since American Airlines did go bankrupt. So we haven't seen this from a major US airline in a while because the industry has been doing pretty well. Seems like 911 was, was a big shock to the system that led to three bankruptcies. And Covid was the same that has led to at least Spirit's bankruptcy. President Elect Trump has selected his chair of the fcc, and it's great news for Elon Musk and potentially really bad news for Mark Zuckerberg and Tim Cook. Meet Brendan Carr, who come January will head up the agency tasked with regulating tv, Internet services and radio in the United States. Normally it's been a sleepy corner of the D.C. bureaucracy, but the FCC could adopt a much bigger role if Carr gets his way. And his main objective, should he get that power, is to punish tech companies and TV outlets he says are too liberal in their viewpoints. On the big tech front, he's accused Meta Alphabet, Apple and Microsoft of running a, quote, censorship cartel that aims to silence conservative voices. One of his objectives is to repeal Section 230, the Federal Rules that shield Internet platforms from being liable for users posts. And as for traditional tv, Car lambasted NBC when Kamala Harris appeared on SNL right before the election, saying that it tried to evade an FCC rule that forces networks to give equal airtime to candidates. So there are a lot of business leaders out there who are pretty nervous about CAR taking charge of the fcc, but Elon Musk is not one of them.
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Yeah, he's definitely. Car is definitely an Elon guy. Carr wrote on X that we must dismantle the censorship cartel. And Elon immediately replied with one word of affirmation. He just said base to it. So they're clearly see free speech and see censorship the same way. You're right, though. Elon does stand to benefit. Starlink and Starlink's rivals need FCC licenses in order to, you know, beam their Internet down from satellites. Those frequencies are pretty often hotly contested. So whatever the FCC decides can make or break a company. Elon has also kind of criticized Biden's 42 and a half billion dollars broadband expansion platform where they were using fiber optic cables to bring broadband Internet to rural areas of America. He said, I could have done it better with Starlink. Car seems sees it the same way. So a big winner here is Elon Musk, for sure. Just in general though, the FCC is typically a pretty low key, you know, regulatory body. It emphasizes broadband Internet deployment, which is not necessarily this very partisan thing. But Car is much more interested in big tech, in censorship, and going after what he calls the censorship cartel.
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Right. And that'll be the big question around his leadership, is whether he can expand the jurisdiction of the FCC to do what he wants to do. And he wrote the FCC chapter in Project 2025, which is this manifesto produced by a conservative think tank. That is their wish list for a second Trump presidency. Trump has distanced himself from from that document. But in it, and you can read it, he definitely lays out a sweeping agenda of going after big tech companies that may resemble more of something that would be under the purview of the DOJ or the ftc, which we've talked about endlessly that they've gone over. They've gone after big tech during the Biden administration. So the big question here for CAR is whether he will get the funding and get the legal green light to pursue some of the stuff that he wants. And if he does, then it is a certain big danger for big Tech, especially that section 230. They say that those rules lay the foundation for the modern Internet because tech companies aren't liable for what the content on their platforms. If that goes away, I mean, they could spend literally every day in the courts for years going ahead.
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One name that we haven't mentioned when talking about big tech is Tick Tock. CAR is not a fan of Tik Tok. He supports the current efforts to ban Tik tok in the U.S. he cites national security concerns, which could lead to some tension because Trump has kind of flip flopped on that issue and said, I think TikTok should stay now. So that is a potential battleground that might cause some friction between Trump and Ankar. But you are right, writ large, he is someone that big tech is probably a little bit nervous is coming down the pipeline, even though the FCC doesn't probably have the jurisdiction or, you know, the purview to really regulate it, as CAR might hope to. Now, let's talk about a recent Pew Research survey that shows just how much the news landscape has changed. Gone are the days where people's main source of news were talking heads on TV screens. Instead, Pew found that one in five Americans, nearly 40% of adults under 30, regularly get their news from influencers on social media. The Survey talked to 10,000 adults and studied 500 news influencers with at least 100,000 followers to piece together people's news diets. And one big takeaway is that there is a huge gender gap. Of the influencers in the survey, a clear majority are men, coming in at 63%. In terms of platforms, X is the most popular, with 85% having a presence there. Lapping Instagram, the second most popular, which is used by 50%. Neil, if you look at Legacy Media Network's falling ratings and the recent presidential election where the Joe Rogan Experience and Call Her Daddy both played major roles, a paradigm shift is clearly underway in the news game, and this Pew Research survey only serves to reinforce that.
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It really does. And we just talked about a survey that showed that the trust in legacy media had fallen to an all time low. 59% of US adults surveyed by Pew in September said they had a lot or some trust in information from national news organizations that is down so much from 76% in 2016. People are turning toward individual creators who they view as more authentic and more like them and more able to bring them the news that they want. Maybe it is a convenience factor because they're always on your phone and you're scrolling on Instagram anyway, but we are do seem to be under a sea change. AP the Associated Press, which is one of the few organized news organizations that covers the entire globe, just announced that they're going to cut staff by 8%. The Washington Post is losing up to $100 million a year. They're losing subscribers. They lost 10% of their subscriber base after they did not endorse a presidential candidate. So there clearly are changing tides here where news creators are on the rise and legacy news organizations are on the downhill.
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You can kind of trace the rise of influencers back over a decade so, almost 10 years ago. Remember, Barack Obama made waves when he granted an interview to some major YouTube creators at the time. It was this big deal that he was kind of giving a platform to these smaller YouTube creators. But then fast forward to this year and the Democratic National Convention credentialed 200 social media creators for their four day event. The RNC also hosted more than 70 influencers. It's clearly part of the political playbook, at least at this point, to bring these influencers in because it's clearly where a lot of people under the age of 30 are getting their news from. So it's just a totally different ballgame at this point. The research from Pew also dove into how different platforms attract different audiences. There's a much narrower gender divide on TikTok compared to all the other platforms. On most other platforms, news influencers who are male out number females 2 to 1. But on TikTok it's 51 male, 46% female. So it is interesting to see how different gender breakdowns stretch across platforms.
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So what might we see going ahead? You might see like struggling news organizations start to partner with creators and individuals who bring the news who may not even have experience. I mean, 84% of news creators on TikTok do not have any formal journalism experience. But clearly people don't care about that. They want someone who's authentic and who is talking to them like it is. Even if they are overtly biased. It does not seem to matter to people as long as they are upfront about it. So I think we'll start to see news organizations tap into influencer networks. You're already seeing this with Yahoo News. You're already seeing this with some other media outlets. NBC tapped a bunch of influencers to lead their and their Olympics coverage in Paris this summer. So I think you might start to see some interesting partnerships between legacy media outlets that are reading this exact survey and saying, oh, we got to, you know, we got to hitch our wagon to these influencers. So I think you'll see some interesting partnerships coming through the pipe.
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Up next, we got Toby's Trends. When you think about businesses like Allbirds that are selling through the roof, you think of a cool product and fun marketing, right? The overlooked secret is actually the businesses behind the business that make selling simple for millions of sellers. That business is Shopify.
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The secret's out. Shopify knows their stuff when it comes to selling. Shopify is the home of the number one checkout on the planet. And Shopify's shop pay boosts conversions by up to 50%. That means way less carts getting abandoned and way more sales going.
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So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are scrolling or scrolling on the web, in your store and in their feeds.
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Upgrade your business and get the same checkout Allbirds uses. Sign up for your $1 per month trial period at shopify.com Morning Brew. All lowercase go to shopify.com Morning Brew to upgrade your selling today. That's shopify.com Morning Brew. What does the growth of every business pretty much depend on besides great snacks.
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In the break room? It's got to be innovation.
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Exactly. And innovation relies on business processes that are clear and quick.
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Most CEOs understand the importance of innovation, but in truth, a majority feel their teams could be better at it. With more than eight out of nine innovation projects experiencing stalls and inefficiencies.
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Luckily, that's where Miro's Innovation Workplace comes in. It comes loaded with AI enabled tools to help teams get from idea to output faster.
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Yep, we're talking text to diagram functions, AI enabled intelligence, widgets, two way sync tech and design capabilities to name a.
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Few Whether you work in innovation, product design, engineering, ux, agile or it, bring your teams to Miro's revolutionary Innovation Workspace to be faster. From idea to outcome. Go to miro.com to find out how. That's M I R O.com.
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What if you got the pay and the prestige of being a doctor, but without the insane working hours? Well, welcome to dermatology and welcome to Toby's Trends, where I unpack an emerging trend for you all to impress your friends with. Dermatology is the hottest new job in medicine, with residency applications for dermatology slots up 50% over the past few years, according to the Wall Street Journal, America's obsession with skin care is pushing many towards the field. While some pull factors include a more normal 40 hour workweek rather than the gut wrenching hours required in other fields of medicine, and the pay is pretty nice as well. Dermatologists earn a median of $541,000 a year, according to a recent survey from the Medical Group Management Association. Throw in a chance to build and monetize a following on social media and it's not hard to see why the field is attracting more and more people. Neal I feel like this is a confluence of a lot of trends. Young people looking for work, life balance, social media, supercharging some careers and people care more about their skin and well being. A triple shot of Toby's Trends.
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And when Botox was approved for frown lines by The FDA in 2002, that kind of kickstarted the slow burn of dermatology becoming more in the public consciousness. Yeah, I think this is, you're right. I think this is the confluence of a lot of trends. Maybe people looking at themselves on zoom all day during the pandemic, seeing what they look like, saying, oh, I probably should get into skincare. That's driving demand for this profession. Also, half of all doctors say they are burned out. And you know, maybe in previous generations you just kind of grinded as a doctor and that was what you were supposed to do and it was this higher calling and yes, you got a lot of pay, but also yes, you were on call, your beeper was going off at all hours of the night. But at this point you're just like, you know what, I rather just have my nights and weekends. But it does appear like just work life balance is weighing out over any other concern, especially in the medicine profession.
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It certainly wasn't always that dermatology was a prestigious field. Early work of dermatologists was not glamorous at all. They tended to Treat, you know, venereal diseases, syphilis that manifested on the skin. But it started attracting a lot more practitioners when you mentioned that 2002, when the FDA approved Botox for for use. Because now you are introducing medical treatments, but also cosmetic treatments. And so that opened it up to a new thing. And I mentioned the presence. You can't talk about dermatology without talking about social media. Tons of these dermatologists have big followings on social media because skin care is just like the get ready with me phenomenon on TikTok. Skincare is just so deeply ingrained in social media culture right now that you have the ability to build this following outside of, you know, your actual practice, which is very appealing to a lot of people. So I do just want to give dermatologists their shout out though. They're the first line of defense for a lot of people. A lot of things manifest on your skin. Skin cancer is the most common form of cancer in the United States. So you can kind of have it all. You can have the work life, you can have the good pay, you can have the social media following and you can have that higher calling where you're actually helping people.
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Right? So if you are listening to this thinking, hey, maybe I want to be a dermatologist and get paid $541,000 a year. Well, get in line with all of this. With all of these perks comes a lot of competition. One example is that at UConn Health there were 600 applications for four residency slots. So, you know, it's going to be tough to get into some of these higher level residency programs. Let's sprint to the finish with some final headlines. I regret to inform you there's been another E. Coli outbreak. One person has died and at least 39 people have become sick across 18 states from an E. Coli outbreak linked to organic and baby carrots sold in U.S. grocery stores. The CDC said the carrots, which were supplied by Grimway Farms in California, were sold under popular brand names including Trader Joe's, Target's Good and Gather, and Walmart's market side. They are no longer on store shelves, but the CDC says you should throw away or return any bad carrots in your house that fit the description on its website.
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I mean, what this really shows is how many of these so called separate brands actually rely on the exact same suppliers. I mean, Aldi, Kroger, Publix, Target, Trader Joe's, Walmart, Wegmans, Whole Foods, they all lead back to Greenway Farms, just with different packaging. So we've seen this with some other of the E. Coli outbreaks where, you know, waffles supplied by one manufacturer made it into a bunch of different waffle brands. So what this is really showing is just how many of these brands are connected by single suppliers. In some Trump Cabinet news, the president elect chose Fox News contributor Sean Duffy to lead the Department of Transportation. For those keeping track at home, this is now the second time in two weeks that Trump has chosen a Fox personality to serve in his cabinet after he picked Pete Hegseth to lead the Department of Defense. But Neil, Fox News isn't even Duffy's only TV experience. He also appeared on MTV's the Real World back in 1997.
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Should also mention that he he spent eight years in the House from Wisconsin representing Wisconsin. But yes, his most recent stints have been on Fox News. He's also an accomplished lumberjack and has won several world championships in speed climbing events. Also, people might remember him from the Real World, but he stepped into, he's going to step into this big role that under, you know, Transportation Secretary Pete Buttigieg has been on a lot of news headlines because of spending that infrastructure money bill and Buddha judge has been very vocal about protecting consumers, especially in the airline industry. He's taken on airlines when it comes to price gouging for various ticket prices and all these hidden fees. So we'll see if he continues what what Mayor Pete has done in this role or he rolls some of that back. But we'll see. It's become a very high profile role in the last four years at least. Here's a pretty shocking finding from a recent paper. Amateur readers can't dependently differentiate between classic works of poetry from literary icons like William Shakespeare and Chatgpt created poems that are modeled after them according to a study published in Scientific Reports. Here's the more intriguing part though. Those readers preferred the AI generated poems on average than the human written ones and more often thought the AI poems were written by humans. The authors think that the non expert readers like the AI poems better because they were more straightforward and easier to understand than the brain busting stylings of poets like Shakespeare and Emily Dickinson.
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Okay, so I'm going to test you Neil, and test you all listening at home. I have two haikus in front of me. One I wrote and one was written by Chat cbt. So you're ready. Here's haiku number one. Toby lights the micro. Neil's banter sharp as sunrise, morning brew, pure joy. That's haiku number one. And then here's Haiku number two. I am a robot. A robot wrote this poem. Thoughtless lines of code. So which one, haiku number one or number two do you think was written by a robot?
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I think you're doing reverse psychology on us, so I'm going to go with you. Wrote the robot one. Son of a gun, that's too easy.
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Haiku number one was in fact written by Chat.
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And no disrespect to your name, Toby, but this study compared Shakespeare, Allen Ginsburg, Emily Dickinson, Walt Whitman poems to AI generated one. So. And people could not tell the difference at all and they liked the AI poems better. And I think that's a very common, common feeling that when we read these poems and we know they're classics and they're so important and ostensibly very good, but sometimes they're just really hard to understand and Chat Beatty just dumbs them down a little bit and maybe evokes a little more emotion in us.
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You want to know what's funny is that I actually prompted ChatGPT to write a poem like Toby from Morning Brew and that's what it came up with. So I tried to, you know, fool you, but you're too smart. Finally, my fellow Floridians, cover your ears because Tropicana has changed its orange juice bottle again and it stinks. The OJ maker recently ditched its iconic clear plastic carafe esque bottles to introduce a more traditional look that is slimmer and a lot more boring. Now, it's one thing to ditch the recognizable silhouette, but Tropicana also went in, shrink, flated the bottle as well and now only contains 46 ounces of juice, down from 52. Say it with me, Neal, this new bottle stinks.
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No, it's fine. I don't know why everyone's getting in a, you know, getting in such a tizzy about it, but it has had a very dramatic effect on sales. In July, tropicana sales fell 8.3% from the previous year. In August, sales dropped 10.9% and absolutely cratered. In October, tropicana sales fell nearly 20% year over year. I don't know how much that has to do with the bottle. I looked at the bottle. It looks like any other orange juice bottle. That's probably. That is the problem. Tropicana had this wide aperture and a bigger bottle cap that I guess people liked. This one is much slimmer, has a smaller aperture, and looks very much more generic. And maybe that's what customers are pushing back on. But this is not the first time that Tropicana has had a botched redesign. In 2009, it changed its cartons to look much more minimalist from that, you know, striped straw in the orange juice, which is very iconic. And they moved away from that. And then customers revolted and after six weeks, Tropicana brought back the the striped straw.
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I tell you what, Floridians, we are finicky when it comes to our Tropicana. We just want it to look the same and remind us of, you know, the burning orange peels that I smelled growing up every morning.
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Okay, let's wrap it up there. It's great to be back and spend some time with you this Tuesday morning. Thanks so much for listening and have a great rest of your day. For any questions, comments or feedback, send an email to Morning Brew Daily at Morning Broadcom. You know, I was catching up on some Seneca, the stoic philosopher, and one of his quotes stood out to me. He said, there is no delight in owning anything unshared. So if you want to experience some of this delight, share Morning Brew Daily with your friends, family or coworkers who could use a morning pick me up. And if no one springs to mind immediately, Toby has some inspiration.
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So we know that 40% of adults under 30 get their news from news influencers. Let's bump that up to 45%, maybe 50% by sending your favorite new influencers to them via this podcast.
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All right, let's roll the credits. Emily Milian is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Uchino Ogu is our technical director. Billy Menino is on audio. The FCC won't let hair and makeup be Devin Emery is our chief Content officer, and our show is a production of Morning Brew.
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Great show today, Neal. Let's run it back tomorrow.