Spirit Airlines files for chapter 11 bankruptcy
Spirit Airlines, the nation’s largest ultra-low-cost carrier, has filed for bankruptcy protection, the company announced Monday.
Facing significant financial headwinds, the Dania Beach, Florida-based airline said it has entered into Chapter 11 bankruptcy proceedings in an effort to “position the company for long-term success.”
Importantly for passengers, all of Spirit’s operations will continue during the proceedings — meaning, travelers who have tickets booked on Spirit in the coming months should expect their flights to operate as planned.
“This set of transactions will materially strengthen our balance sheet and position Spirit for the future,” said Ted Christie, Spirit president and CEO, in a statement announcing the news.
Spirit faces significant financial challenges
Monday’s announcement came after months of speculation amid financial turmoil at the budget carrier.
Spirit has faced myriad financial hurdles in recent years, dating back to the start of the coronavirus pandemic. The airline has racked up billions of dollars in debt, more than $1 billion of which was coming due soon.
The airline fleet has also been significantly affected by an engine issue affecting a wide range of airlines and aircraft worldwide — which has caused Spirit to slash routes over the course of this year.
Earlier in 2024, the airline saw a federal court block its planned merger with JetBlue — a scuttled deal that followed failed merger talks with budget airline competitor Frontier Airlines.
Industry headwinds
Meanwhile, Spirit has also fallen victim to industry trends that have negatively affected a handful of budget airlines in recent years. After low-cost carriers enjoyed widespread success in the 2010s, the larger network airlines — most notably Delta Air Lines and United Airlines — have led the U.S. airline industry profitability since the pandemic.
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“The airline industry as a whole is facing significant challenges, including rising operational costs, changing consumer preferences and fluctuating demand, and we are not immune to them,” Spirit noted Monday.
This summer, the carrier announced sweeping changes to its product offerings earlier as a way to boost its earnings as customers have flocked to airlines with premium seat options in recent years. Spirit revamped how it presents and sells its tickets and add-on bundles, and re-packaged its Big Front Seat into a new “business class” offering. The carrier, like Frontier, also dropped its longstanding change and cancellation fees on most tickets.
What if you have flights booked on Spirit?
In an open letter to customers Monday, Spirit said it expects to exit Chapter 11 bankruptcy proceedings by the end of the first quarter of 2025.
In the meantime, customers can continue to book flights on Spirit using cash or frequent flyer miles. And the airline expects to operate as planned during the critical upcoming holiday period.
“You can continue to benefit from our Free Spirit loyalty program, Saver$ Club perks and credit card terms,” the company added in the open letter.
Bottom line
While news of the bankruptcy might be unsettling to Spirit customers, there’s a strong precedent of big U.S. carriers continuing to fly largely as normal during bankruptcy proceedings.
Many of the largest U.S. carriers have gone through bankruptcy proceedings this century — American Airlines being the most recent, culminating with its merger with US Airways, which closed in 2014. Delta Air Lines and United Airlines each declared bankruptcy in the 2000s, also going on to merge with major rivals and emerge as stronger, leaner competitors.
This is a developing story. Check back for updates.
