Business
Western Alliance CEO says alleged loan fraud is ‘incredibly frustrating’ but isolated issue
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Western Alliance, one of the regional banks at the center of concerns over loans made to non-bank financial players, said Wednesday it believes the loan that sparked last week’s selloff is an isolated case.
The bank reported third-quarter earnings Tuesday afternoon and noted it had set aside $30 million in reserves for possible losses on a $98 million loan made to the Cantor Group. Last week, Western Alliance disclosed that it had sued the borrowers behind the Cantor Group for alleged fraud related to the collateral for the loans.
“While incredibly frustrating, we believe this is a one-off issue in our note finance business and have adjusted our onboarding and ongoing portfolio monitoring practices,” Western Alliance CEO Kenneth Vecchione told analysts on Wednesday.
Shares of Western Alliance rose almost 2% in midday trading.
Regional banks are getting a reprieve this week after Western Alliance and Zions, which also had exposure to the alleged loan fraud, reported results that didn’t include any new loan meltdowns. Each of the banks posted rising hauls from net interest income on lower funding costs, while some of their metrics around credit quality actually improved from previous quarters.
The Cantor Group episode forced Western Alliance to review other loans in its note finance portfolio, Vecchione said Wednesday.
“Today we have reverified titles and liens for all notes greater than $10 million and have found no irregularities,” he said.
Analysts grilled Vecchione during the Wednesday call for more details around the bank’s loan collateral and lending to non-depository financial institutions, or NDFIs.
“What are you doing to validate your collateral and safeguard against future frauds?” Autonomous Research analyst Casey Haire asked. “It just seems like as long as you’re not afraid to go to jail, it seems easy to double pledge collateral.”
Besides the recent review, Western Alliance periodically checks collateral to make sure the bank is still in a position to collect if the loan sours, executives said. Much of the bank’s NDFI book is tied to residential mortgages, which Western Alliance considers low-risk, they added.
‘Can’t unsee’
Western Alliance is also exposed to another recent blowup, the bankruptcy of the auto parts maker First Brands.
But in this case, a loan facility made to a fund managed by a subsidiary of the investment bank Jefferies “remains current, and we continue to receive principal and interest payments as modeled,” said Vecchione.
While this week’s reassurances have calmed markets for now, the sharp selloff in regionals last week is leaving a lasting mark on the industry. Shares of both Western Alliance and Zions plunged on Thursday after the banks disclosed problems with the Cantor Group.
Investors are ready to hit “sell” on any signs that the losses aren’t isolated, and share gains for the group will be capped for the foreseeable future because of these worries, said Timur Braziler, who covers mid-cap banks for Wells Fargo. He cut his recommendation on Western Alliance to “sell” on September 29.
“You can’t unsee these events,” Braziler said in an interview. “The timer for any kind of sustainable outperformance within the regional group has gotten reset once again.”
The earlier plan, which would have seen the US government take effective ownership of as much as 90% of the airline, faced stiff opposition from Wall Street, Capitol Hill and even a member of Trump’s own cabinet. Transportation Secretary Sean Duffy told Reuters a rescue would amount to tossing “good money after bad”.
Spirit Airlines check-in Kiosks sit idle at Oakland International Airport on August 13, 2025 in Oakland, California.
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Spirit Airlines could shut down as early as 3 a.m. ET Saturday, according to people familiar with the matter. The carrier has failed to secure a financial lifeline to continue operating, though it hasn’t commented on the potential shutdown or its plans.
About 290 Spirit flights are scheduled for Saturday, according to aviation site Flightradar24. Another 381 are scheduled for Sunday.
Travelers with Spirit tickets could be understandably rattled. While there have been some U.S. airlines to shut down in recent years, the budget carrier is larger than most recent airline failures and links major cities like New York, Miami, Detroit and Los Angles — and many others in between — with its Airbus jets.
Here’s what travelers need to know:
You have a Spirit ticket. What should you do?
Immediately? Nothing.
Travelers who are booked on a Spirit flight, like this CNBC reporter is for later this month, are likely to receive a refund if they purchased tickets with a credit card.
If the ticket was bought with a debit card or with loyalty points, however, the chances of recovering funds are slim to none, said Henry Harteveldt, founder of Atmosphere Research Group, a travel consulting firm.
“If you’re holding a reservation for a flight on Spirit don’t proactively cancel it. Wait for the airline to announce it is shutting down,” he said.
Would Spirit be able to help you at the airport?
Don’t count on it.
Spirit has declined to comment on a potential shutdown. If it confirms an end to operations, the carrier will most likely have information on its website about travelers’ next steps.
Harteveldt said travelers shouldn’t go to the airport expecting to find Spirit staff in the event the airline ceases operations. Call centers are likely to be overwhelmed if they are still staffed.
That could leave passengers with fewer answers than they’d like, but other airlines are likely to help assist affected customers.
Airlines that offer last-minute fares, likely with some discounts, will be available to travelers at airport ticket counters.
How can another airline help?
United Airlines, JetBlue Airways, Frontier Airlines and American Airlines are among the carriers that have said they are ready to assist Spirit customers and crews if the carrier shuts down.
That could mean scheduling additional flights to carry the stranded passengers, similar to what they do during a hurricane or other natural disaster.
Why could Spirit shut down?
Spirit, known for bright yellow planes, low fares and fees for everything else, had been successful for years, but this week it’s been on the brink of liquidation after failing to reach a deal with bondholders for a $500 million government bailout from the Trump administration.
Last year Spirit filed for its second bankruptcy in less than a year, though it’s had a host of problems even before then.
A plan to be acquired by JetBlue was blocked. Rising costs upended its business model. An engine defect grounded dozens of its planes. And, more broadly, upscale travel became more popular with consumers, driving airline profits.
At the same time, big, legacy airlines were selling their own basic economy fares that were similar to what Spirit was offering, but with bigger networks.
What does this mean for travel going forward?
Airlines have been adding flights since Spirit’s bankruptcy filing last year on some of its routes and at major airports. They’re likely to keep doing so.
Experts have said they expect fares to rise, at least in some markets, if the discounter goes away, even though the carrier has shrunk substantially.
Business
Middle East crisis: Air India to make food optional, help cut price of tickets – The Times of India
NEW DELHI: Desperate times call for desperate measures. Full service Air India is planning to make meals optional on its domestic and short international (under two hour) flights. Once this “unbundling” rolls out in the next month or two, passengers opting out of meals could have upwards of Rs 250 shaved off their ticket price. While this move, say people in the know, is “on the anvil,” the airline is looking at several other unprecedented measures to fly through the severe cost-revenue turbulence caused by the unending West Asia war.While not opting for meals could lead to slightly cheaper economy tickets, AI is looking at unbundling lounge access for business class passengers because those opting out of this, could get their tickets cheaper. On an average, lounge operators charge Rs 1,100-1,400 per user at metro airports and Rs 600-700 at non metros.The average spend is about Rs 1,000 per lounge. Many business class flyers are frequent travellers who just make it to airports in time for their flight and do not head to the lounge. If unbundled, this could be a saving in their ticket cost. Banks have been reducing lounge access for credit card users for the same reason to cut their costs.“From Day One, Air India has had meals bundled in its ticket price. Now the way aviation turbine fuel (ATF) price is rising and the rupee crashing since Feb 28, ticket prices are going up. India is a price-sensitive market and raising fares beyond a point leads to a fall in traffic with many opting to travel by train or road. This has led to the rethinking to unbundle meals on some flights. Other steps are also being considered,” said people in the know.Several airlines globally have over the past few years unbundled their onboard offerings. Many international full service airlines offer a basic meal in economy while giving the option of buying gourmet meals at an additional cost. Ditto for alcoholic beverages, with cheaper beer and wines being given at no extra cost while the others being charged for. “For passengers, the distinction between full service and low cost airlines is blurring very fast,” said an industry old-timer.
what happens to stranded passengers now?
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