Spirit Airlines Files for Bankruptcy, Assures Customers of Continued Service
By Allyson Versprille, Jonathan Randles, and Mary Schlangenstein | Bloomberg
Spirit Airlines filed for Chapter 11 bankruptcy protection on Monday, citing $1.6 billion in debt as it seeks to restructure following significant financial losses and unfulfilled merger attempts. The airline, which will shift control to its bondholders and has faced challenges in the wake of the COVID-19 pandemic, assured customers that it would maintain normal operations during the restructuring period.
In communications with customers, Spirit emphasized that booking flights “now and in the future” remains safe, as passengers can still utilize tickets, loyalty points, and rewards programs. The airline anticipates concluding the bankruptcy process by early 2025, allowing for financial restructuring aimed at reducing debt and enhancing travel experiences.
The decision comes as the airline industry braces for a record number of passengers projected this Thanksgiving season. Spirit had attempted mergers with JetBlue and Frontier Airlines, but both efforts collapsed, prompting the current restructuring. It has reached an agreement with creditors holding approximately 80% of its debt, which includes swapping $795 million of bonds for equity.
Despite fleet challenges and market pressures, including competition from major carriers, Spirit plans to adapt by incorporating features like additional legroom and free checked bags to compete better in a changing market landscape.
CEO Ted Christie reassured customers of their ability to manage bookings normally, drawing parallels between Spirit’s situation and other successful airlines that have undergone similar restructuring processes. The airline has seen its stock plummet by 93% this year and aims to stabilize its financial footing amidst ongoing industry shifts.
The case is filed under Spirit Airlines Inc., in the US Bankruptcy Court, Southern District of New York.
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