Photo Credit: Tomás Del Coro, Wikimedia Commons
Spirit Airlines, the country’s largest budget carrier, has filed for Chapter 11 bankruptcy protection in a bid to cut debt and secure its future.
The South Florida-headquartered airline, which has flights out of Chicago O’Hare International Airport, says it will continue operating normally. For customers and employees, it’s business as usual. Tickets, credits, and loyalty points will still be valid. Vendors and employees will be paid.
Spirit has lost more than $2.5 billion since 2020 and faces over $1 billion in looming debt payments in 2025 and 2026.
To tackle these challenges, the company reached a deal with bondholders to restructure its finances. As part of the plan, Spirit will receive a $350 million equity investment and convert $795 million of debt into stock. Bondholders are also extending a $300 million loan to keep operations running smoothly during the process.
“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,” said CEO Ted Christie.
The airline has filed a reorganization plan in court with support from most of its bondholders. It expects to complete the process by early 2025. While the restructuring is underway, Spirit will be delisted from the New York Stock Exchange, and its shares are expected to be canceled.
Spirit’s move follows a path taken by other airlines that used bankruptcy to reorganize and return to profitability. It remains focused on improving its services and maintaining its reputation as a low-cost travel leader.
Adding to the air carrier’s woes, was the news of a Spirit Airlines flight from Fort Lauderdale to Port-Au-Prince taking gunfire just before landing in Haiti’s capital. Gangs shot at the plane, injuring a flight attendant, the airline and U.S. Embassy confirmed. The flight was diverted and landed safely in the Dominican Republic.
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