Spirit Makes Plans to Shutter After Government Rescue Fizzles

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1:54Gene Munster:correspondent for global aviation uh spirit airlines preparing to end operation what happened to the potential deal with the us government so from what we understand spirit airlines couldn't reach a deal with its creditors and so the creditors were a roadblock bloomberg earlier reported that creditors were a roadblock in agreeing to any deal with the government and And that was primarily because of concerns about what their, what basically liabilities and what their recoveries would look like post a government deal. I mean, remember, the government was proposing them superseding other lenders.

2:31And so that's turned into a bit of a, the creditors weren't sort of happy with that deal. And so we understand because of that, the government deal can't go forward. And that's really forcing Spirit Airlines to consider bankruptcy and shutting down, essentially.

2:47Scarlet Fu:OK, so a shutdown, what would that look like for an airline? How long does that take? Shutdowns usually take a few. It could take a matter of a couple of days or it could be a day. And it would sort of cause considerable discomfort and considerable sort of pain to various people. So on one hand, you have the passengers who would then be stranded without options in terms of being able to fly. I mean, we may see some of the other airlines and their competitors offering rescue flights or other sort of alternatives. But as far as the consumers are concerned, they would be sort of looking for a way to get out of their flights and see where they could go to.

3:29And the other concern is one for the staff and essentially what happens with them. And then also the assets of the airline and what happens with the aircraft and other sort of assets that the airline has. So there's multifacets to that thing. And we are still looking to see what the rollout is going to be if there is, in fact, no chance of saving this.

3:48Gene Munster:I'm just looking at the DES screen for Spirit Airlines. It shows it has about almost 10 ,000 employees. So that's the human side of it. Is there any chance, Sid, that another airline could come in here? I see the JetBlue stock is down more than 4%. Maybe people speculating that they might come in and try to buy this thing. There could be speculation that the assets could go up for the assets could be available to other airlines to get them. There's also a possibility that the creditors and the government reach some sort of agreement just in the sort of final, like the final hour. So it's still not yet over, but we will be watching the story to see what happens next.

4:27Gene Munster:Looking at JetBlue Airways right now, the stock's actually trading up. I correct myself, stock's trading up a little bit, but I wonder, the government blocked them before, so I'm not sure they would proceed again.

4:38Scarlet Fu:That's a good question. I mean, Sid, do you think the government might try to pivot and not force consolidation, but encourage an airline to pick up Spirit? The government would try, but again, the stumbling block would be what price those are paid and essentially what the creditors sort of want from this. So it is hard to see how an airline could come in and get a merger done, especially given that Spirit's been running out of cash and they're in their second bankruptcy. I mean, they were meant to exit their second bankruptcy. Good point. And so it's hard to see how that could happen so quickly in terms of giving them a lifeline to actually keep going.

5:21Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. If your finance team spends more time finding data than using it, if there's one entity here and one here and one here and one here, if scaling your business feels like starting over, you need the Intuit ERP. Intuit Enterprise Suite is the AI-native ERP solution that's powerful, painless, and proven. Learn more at intuit.com slash ERP. You need to make a huge presentation in an hour. Adobe Acrobat uses AI to take all your documents and generate a presentation with a single click. Build slides quickly and streamline the process.

6:01Scarlet Fu:Need a last-minute pitch deck? Do that with Acrobat. Need to level up your presentation design? Do that with Acrobat. You have 30-plus documents that need to be simplified into a proposal. Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat.

6:20Gene Munster:Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto, without all the bugs or the confetti. Retirement accounts, yep. High-yield cash, yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps.

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7:21Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube.

7:35Gene Munster:This is the conversation of the day for me. Gene Munster, Managing Partner, Deepwater Asset Management, joins us here because it was a big, big week for some of the leading technology companies. Remember, Friday afternoon, we had the Amazons, the Facebooks, the Metas, all that kind of stuff, Microsoft report numbers. And then last night, Apple. Gene, you saw a lot of the big names, a lot of the headline names report earnings here today. It seems like the market really is trying to identify winners, maybe a Google, losers, at least in the short term, maybe a Meta, given its stock price performance yesterday.

8:06Gene Munster:What was your takeaway from all these numbers? Well, I tend to look at beyond the quarter, beyond the guidance and try to think about what we've learned about whatever the kind of the investment curve that we're on. Of course, we know what the A topic is. What inning are we in AI? And what I learned is, I would say, it's probably consensus from the takeaways. So it's that we're still early, probably earlier than what we had thought maybe six months or a year ago. And specifically, if we look at kind of one benchmark, which is the hyperscalers, CapEx spend for this year and for next year, we saw a measurable bump up for calendar 26, calendar 27.

8:47So three of the four, with the exception of Amazon, the other three, Google, Microsoft, and Meta, all increased their growth rates meaningfully again, off of numbers that were hard to imagine them going higher. That's been kind of a well-traveled. So Paul, to answer your question is I think we are still very early, very early second inning in all of this and i think there's just this there's part of just being a human thinking that this just can't last i mean we've been we're entering year three of this incredible growth like the numbers just keep getting bigger and the comps get more difficult and they just keep crushing through it eventually it has to slow down we're just not seeing that and i would just put one other piece that we've we've learned google and meta both have shown that they can leverage AI at scale.

9:38Those companies have seen some remarkable accelerations in their growth. Google search going from call it 10, 11 % a year or so ago to 19 % in the March quarter. Meta was growing at 16 % their ad business in the March 25 quarter. They grew at 33 % a year later and guided to 28 % for the June quarter. So we have seen these two companies are great examples of the benefit this nagging question about. Is there actually utility in AI? These companies have showed that. But beyond those, the world really hasn't seen it. And I think that's the opportunity.

10:18Scarlet Fu:So if we're the second inning of the AI cycle, as you put it, does that mean Apple, which really has not done very much with AI, is really not that far behind and can make up whatever lost ground people seem to think it has? Or is Apple's interaction with AI just fundamentally different than the hyperscalers and the rest of big tech? Well, Apple is both behind, but not far enough behind that they can't catch up to your point. And I would just look at very simply is, you know, there's a problem if there was some other competing AI consumer device that was capturing people's attention. We haven't seen that yet.

10:54That's example of a problem. Another example that we know there's a problem if somehow like the kind of the base was starting to drift away for whatever reason. And they've essentially continued to strengthen their underlying base. And, you know, the numbers are quite remarkable. And I think that part of the reason why we've seen this surge over the last three quarters, so iPhone on average has grown at 20 % over the last three quarters. The previous basically four years, it grew at an average of just over 1%. So we've seen this big jump up. That's called a super cycle. That's what I would call a super cycle.

11:33Super cycles don't last, but the fact that they're able to deliver a super cycle in the face of not having any compelling AI, I think speaks to how they've just become the fabric of consumers' lives. So Scarlett, to kind of bring it all together, I think that they're not so far behind that they can't capitalize on this? And I mean, that's the real question here. Shares of Apple right now up 4 %-ish on what was some spectacular guidance really underscores that investors are essentially looking past this great guidance in the June quarter. They're already thinking about next year where that growth slows down, back down, iPhone growth back to 5 % versus 20 % over the past few quarters.

12:16And that's kind of the central question here. You're getting at the real question is like ultimately, can they take AI and create growth, outsized growth outside of the super cycle? And that's what investors essentially don't believe right now. But that's what kind of where the lines are laying down.

12:35Gene Munster:Gene, if we're in the second inning, does that suggest we got many quarters and maybe years of this elevated level of capex to look forward to? And if so, would that become increasingly a headwind for the stocks? Well, the CapEx impact is different for different companies. And so the best that I can see is that if you're a hyperscaler and you're spending more on CapEx, if you have a cloud business, then your investors are generally okay with that spending. On the Google call, they announced that they're going to be basically gave a suggestion that they'll grow CapEx next year between 20 and 30%.

13:14The street was at 10%. This is for calendar 27 now. And the stock didn't, it went down and then it kind of came right back up on that. It basically shrugged it off. Meta does the same thing. Talks about 26, a step up in 26, the stock's down 7%. And so the difference between those and Microsoft talked about a step up in spending is, and the stock didn't, wasn't bothered by it. I think the issue here is CapEx in itself is not negative. What's the issue is, I think, for many investors is that they just don't see the path between CapEx. One last thing, it's a mystery to me because I don't understand why investors don't give Meta credit because they've shown that they can deliver CapEx on faster revenue growth.

13:59Gene Munster:Stay with us. More from Bloomberg Intelligence coming up after this.

14:04Scarlet Fu:You need to make a huge presentation in an hour. Adobe Acrobat uses AI to take all your documents and generate a presentation with a single click. Build slides quickly and streamline the process. Need a last-minute pitch deck? Do that with Acrobat. Need to level up your presentation design? Do that with Acrobat. You have 30-plus documents that need to be simplified into a proposal. Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat.

14:36Gene Munster:Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index.

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15:48Scarlet Fu:Small businesses are the pulse of every community. They bring people together, create opportunities, and drive growth. With a widespread presence in communities across the country, Chase for Business supports small business owners at a local level. That makes it possible for you to connect, learn from each other, and grow together. There's a real commitment to seeing small businesses succeed. The Chase for Business team has knowledge and expertise that span a wide range of financial areas. They can help you make more informed decisions as you navigate the complexities of running your business.

16:20Scarlet Fu:They'll help your business grow with individual guidance and convenient digital tools all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com slash business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A., member FDIC. Copyright 2026, JPMorgan Chase and Company.

17:13Gene Munster:what'd you learn from Exxon and Chevron today? Well, like you said, price trumps volume, number one. Number two, the rest of the world got punched and Exxon and Chevron got pinched. And I think, you know, when you think about the integrated model during times of stress, that's when it works. And I think you'll see similar 4-2-Q as well, because, you know, one queue, we only had one month of that price inflation. We're coming into the second month of inflated prices here. So from an upstream perspective, net benefit to both, even though the production outages are probably more sustained into 2Q, but overall prices are higher and price trumps volume.

18:04So for the most part, we're moving toward an environment for them where at least the upstream component will do well.

18:12Scarlet Fu:And upstream, of course, is exploration and production. Downstream is refining. What was notable to me in looking at the results is that Exxon Mobil was just as challenged as everyone else in giving guidance because no one knows how long the Strait of Hormuz will be closed for. And they really couldn't pinpoint anything. Can't pinpoint anything. And if you look at prices along the curve, I'm not really sure the traders really appreciate it as well, because, you know, we're here and we see that$100 per barrel. But if you look at the November and December contracts, they're somewhere in the high 70s, low 80s.

18:47And so interestingly, by the time we get into election season, those contracts will be the spot contracts. So it'll be very interesting to see what happens at that point. But for the most part, if you think about not only Exxon and Chevron, but also the other majors across the globe, you're seeing the same kind of results where price is trumping volume for the most part. Just lastly, Vince, before we let you go, why don't I just go down to Texas and drill

19:11Gene Munster:a hole? What are rate counts doing? Are the landmans, the wildcatters of the world, are they taking advantage of$100 oil? They are still being disciplined because, as I mentioned to you, the prices out on the longer end of the curve are still somewhat subdued. And so they're not really incentivizing you to drop a lot of capital into the ground. But more importantly, guys like you investors overall telling the space, I don't want additional molecules. What I want is distributions. And that's the process with shareholder engagement, giving them dividends and the stock buybacks that they need.

19:43Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. You need to make a huge presentation in an hour. Adobe Acrobat uses AI to take all your documents and generate a presentation with a single click. Build slides quickly and streamline the process. Need a last-minute pitch deck? Do that with Acrobat. Need to level up your presentation design? Do that with Acrobat. You have 30-plus documents that need to be simplified into a proposal. Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat.

20:20Gene Munster:Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts, yep. High yield cash, yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps.

20:55Gene Munster:Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Add paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures.

21:19Scarlet Fu:Small businesses are the pulse of every community. They bring people together, create opportunities, and drive growth. With a widespread presence in communities across the country, Chase for Business supports small business owners at a local level. That makes it possible for you to connect, learn from each other, and grow together. There's a real commitment to seeing small businesses succeed. The Chase for Business team has knowledge and expertise that span a wide range of financial areas. They can help you make more informed decisions as you navigate the complexities of running your business.