Spirit Airlines files for bankruptcy
Spirit Airlines, the budget airline beleaguered by gunfire in Haiti and incidents of violence involving passengers and staff alike, has now filed for bankruptcy.
In a letter issued Monday and addressed to “All Spirit Guests,” Spirit admitted that it had filed for Chapter 11 in hopes of restructuring its debts. The letter called the move “a proactive step … to position the company for success” and claimed it should be completed sometime in the first quarter of 2025.
The letter also indicated that the Chapter 11 filing had been “prearranged.”
Spirit’s standing as a publicly traded company is likely to change. Spirit told the Business Journals that it expects to be delisted from the New York Stock Exchange sometime soon.
According to the New York Post, the financial situation at the airline is quite dire. Spirit has already lost $2.5 billion in the last four years and within the next year will have to make debt payments totaling more than $1 billion.
In 2022, Spirit tried to merge with another airline. Frontier first attempted a merger but was soon afterward outbid by JetBlue.
The merger with JetBlue never took place either after the Biden-Harris Department of Justice intervened in March, claiming it would cause ticket prices to skyrocket. A federal judge later sided with the DOJ, and the two companies dropped the merger two months later, the Post reported.
In an effort to restructure its finances, Spirit bondholders have now offered $350 million in equity investments that will allow the company to “complete a deleveraging transaction to equitize $795 million of funded debt,” the Jacksonville Business Journal reported.
Bondholders have likewise offered an additional $300 million in debtor-in-possession financing, the outlet added.
Spirit did not go into such details in the letter. Instead, it promised that its agreement with bondholders will “reduce [the company’s] total debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.”
The letter did indicate that the customer experience likely won’t change much despite the major financial shifts behind the scenes. Customers may still purchase tickets and use credit or loyalty points as normal. Its rewards program and credit-card terms likewise remain in place.
Employee wages and benefits will also be unaffected by the Chapter 11 process, according to a website with further information about the case.
However, Spirit’s corporate standing is likely to change. Spirit told the Jacksonville Business Journal that it expects to be delisted from the New York Stock Exchange sometime soon. Once that happens, its stock shares will “have no value as part of Spirit’s restructuring,” the outlet reported.
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