Spirit Airlines, one of the largest passenger carriers in Northern America and known for its ultra-low-cost service, filed for bankruptcy under Chapter 11 on 18 November 2024 and became the first US-based airline to file for Chapter 11 bankruptcy protection in more than a decade.
The airline has filed for bankruptcy, explaining that growing losses, overwhelming debt, tougher competition for budget-conscious travelers, and unsuccessful merger attempts left it no choice. Spirit also attempted to merge with JetBlue in January 2024, but the deal failed as a Federal Judge blocked it. Since then, Spirit has been battling to reconstruct its business model and reduce debt.
Although the airline files for bankruptcy, it will continue providing the services without immediate disruptions to travel plans.
“Guests can continue to book and fly without interruption and can use all tickets, credits, and loyalty points as normal,” Spirit said in a statement.
Spirit says Chapter 11 proceedings are “expected to reduce Spirit’s debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.”
An agreement on restructuring Spirit’s debt with its bondholders has been reached, providing increased financial flexibility for the airline and positioning it for long-term success. It includes a $300 million debtor-in-possession financing, which will keep the airline afloat during the Chapter 11 process.
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Spirit Airlines passengers are still allowed to book and travel flight without any interruptions. The airline assured the customers that:
- all tickets, credits, and loyalty points will be used normally.
- Free Spirit loyalty program, Saver$ Club perks, and credit card terms will remain the same.
- flights will continue as scheduled, including this year’s holiday.
Spirit Airlines is looking forward to completing its bankruptcy by the first quarter of 2025. The airlines plan to work on restructuring its debts and operations and emerge stronger, and more competitive.
After the restructuring of the airline, existing bondholders have given commitments of $350 million equity investment and will turn the $795 million worth of debt into stock to reduce the burden of Spirit.
To summarize, the filing of bankruptcy by Spirit Airlines is in itself part of the adoption of a restructuring process with the intention of reinforcing its financial status and positioning for long-term success. The eventual implications of the bankruptcy for travel plans notwithstanding, however, the airline has assured that flights shall continue to operate as normal during bankruptcy proceedings.
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