Spirit Airlines Files for Bankruptcy Protection Amid Financial Turbulence.
Spirit Airlines, a budget carrier based in the United States, has sought bankruptcy protection following a prolonged period of financial difficulties and unsuccessful merger negotiations.
On Monday, the airline announced that it had reached an agreement to restructure its debt and secure funding during a bankruptcy process anticipated to extend until early 2025. Throughout this period, Spirit’s operations will proceed as usual, ensuring that passengers remain unaffected, according to the airline. Since the onset of the Covid-19 pandemic, Spirit has not achieved a full-year profit and is now the first U.S. airline to file for bankruptcy in over ten years. American Airlines previously declared bankruptcy in 2011 to reduce labor costs amid soaring fuel prices.
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In its statement, Spirit indicated that the Chapter 11 bankruptcy process would not affect employee salaries or payments to aircraft leasing firms. The company will be removed from the New York Stock Exchange in the “near term,” and its stock shares will be rendered worthless as part of the restructuring plan. Despite a robust demand for travel, the no-frills airline reported losses of approximately $360 million in the first half of this year.
The competitive landscape in the budget travel sector has intensified, and Spirit has also been compelled to ground some aircraft due to mechanical issues with certain engines, which have increased operational costs. Earlier this year, Spirit’s much-anticipated $3.8 billion merger with JetBlue was thwarted when a Massachusetts judge ruled that the merger would diminish competition in the industry. Additionally, a previous merger attempt with Frontier Airlines in 2022 failed after Spirit was outbid by JetBlue. Originally established as a long-haul trucking company in 1964, Spirit transitioned to aviation in the early 1980s and rebranded itself in 1992.
The airline is recognized as a pioneer in the budget travel sector, opting to eliminate many standard amenities to maintain low ticket prices.