Spirit Airlines, the largest low-cost carrier in the United States, has filed for bankruptcy. However, the airline says it expects to operate the business as usual throughout the “streamlined Chapter 11 process”.
Backed by shareholders, the airline has begun a prearranged Chapter 11 process to implement a “restructuring support agreement” (RSA). Spirit says the plan aims to reduce debt, improve financial flexibility and ultimately enhance value and the overall travel experience for flyers.
In an open letter to its customers, Spirit says, “the most important thing to know is that you can continue to book and fly now and in the future”.
It is also ensuring passengers that they can “use all tickets, credits and loyalty points as normal” and “continue to benefit from our Free Spirit loyalty program, Saver$ Club perks and credit card terms”.
“We expect to complete this process in the first quarter of 2025 and emerge even better positioned to deliver the best value in the sky,” it states.
“Other airlines that are operating successfully today have undertaken a similar process.
“As we head into the holiday season and beyond, we look forward to welcoming you on board again soon.”
As part of the agreement, Spirit will receive a US$350 million equity investment and equitise $795 million in debt. An extra $300 million in debtor-in-possession financing will provide operational support during the process.
The airline says employee wages remain unaffected.
According to Spirit President and CEO Ted Christie, the agreement “is a strong vote of confidence in Spirit and our long-term plan”.
“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,” he stated.
“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.”
While Spirit will likely be delisted from the New York Stock Exchange, shares are expected to trade in the over-the-counter marketplace during the restructuring.
For more information on the restructuring process, visit www.SpiritGoForward.com.
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By filing for bankruptcy, Spirit Airlines joins a long list of carriers to go bust in 2024, including Canada Jetlines, Air Malta, Armenia’s FlyArna, and Antigua and Barbuda’s LIAT.
Closer to home, Aussie budget airline Bonza also folded this year, while Rex Airlines went into voluntary administration in July, grounding all jet operations.
Another airline to operate in Australia, Air Vanuatu also went into voluntary administration in 2024.
But Spirit operates on an entirely different level to these carriers, with a fleet of more than 200 aircraft; to put that into perspective, Qantas uses around 125 planes. The US airline currently flies to ports across North America, Central America, South America and the Caribbean, but has recently cut dozens of routes in its network.
A recent Axios survey ranked Spirit as one of the least reputable companies in the US, lower than Meta, TikTok and the Fox Corporation.
