Spirit Airlines files for Chapter 11 bankruptcy protection
Spirit Airlines has filed for Chapter 11 bankruptcy protection following significant financial struggles due to mounting losses and debt maturities, the airline announced Monday.
The filing comes after two failed mergers in less than two years – one recently with Frontier and another earlier in 2024 with JetBlue – which left the ultra-low-cost carrier in a bind after repetitive quarterly losses.
In October, Spirit announced plans to sell multiple aircraft and lay off workers as it tried to raise cash and revive operations.
Spirit Airlines President and CEO Ted Christie said the airline has entered into an agreement with its bondholders that is expected to reduce the company's total debt and provide increased financial flexibility.
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"This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience, providing new enhanced travel options, greater value and increased flexibility," Christie said in a news release. "I'm extremely proud of the Spirit team's hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our guests."
The airline listed its estimated assets and liabilities in the range of $1 billion to $10 billion each, according to a court filing on Monday.
The airline, as part of the prearranged Chapter 11 bankruptcy protection, has received a commitment for a $350 million equity investment from existing bondholders.
Existing bondholders will also provide $300 million in debtor-in-possession (DIP) financing, which, together with available cash, is expected to support the airline through the Chapter 11 process.
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Spirit stock shares will be canceled and have no value as part of the airline's restructuring, Spirit said in the release, following its delisting from the New York Stock Exchange "in the near term."
The company started out as a long-haul trucking company in 1964 before shifting to aviation around 1983. It offered leisure packages to popular destinations under the name Charter One Airlines and rebranded to Spirit in 1992.
The discount carrier became popular with budget-conscious customers willing to forgo features like checked bags and seat assignments.
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Ultra-low-cost carriers, which excelled at keeping their expenses low and offering affordable, no-frills travel, have struggled since the pandemic as travelers prefer to pay extra for a more comfortable journey as they pursue experiences.
The airline said guests can still book flights and fly as normal, and all tickets, credits and loyalty points can also be used as normal.
Reuters contributed to this report.