Spirit Airlines has filed for bankruptcy protection after years of losses and heavy debt. This is the first major U.S. airline to file for Chapter 11 since 2011.
The airline’s proposed merger with JetBlue collapsed earlier this year, exacerbating its financial challenges. Spirit plans to restructure its debts with bondholders’ help and aims to exit bankruptcy in early 2025.
Despite the bankruptcy filing, Spirit will continue normal operations, allowing customers to book flights without interruption. Employee wages and benefits will remain unaffected, as will payments to vendors and aircraft lessors.
Spirit’s shares have dropped significantly in value this year and are expected to be delisted from the New York Stock Exchange.
Engine trouble
The airline has struggled with operational issues tied to Pratt & Whitney engines and has not made a full-year profit since 2019.
To cut costs, Spirit has reduced its operations, furloughing pilots and delaying aircraft deliveries. The recent bankruptcy filing is part of a broader restructuring effort to ease its $795 million debt load and enhance financial stability.
Founded in 1964 as a trucking company and transitioning to aviation in 1983, Spirit became known for its budget-friendly services, although it now faces challenges common among ultra-low-cost carriers. Analysts are questioning the sustainability of its business model in the current market climate.
