Spirit Airlines, the largest budget carrier in the U.S., announced on Monday that it has filed for Chapter 11 bankruptcy protection. The move comes as the airline grapples with over $2.5 billion in losses since 2020 and faces more than $1 billion in debt payments due in the next year.
The airline plans to continue operating as normal during the bankruptcy process, allowing customers to book flights, use tickets, and redeem loyalty points without disruption. Spirit also assured travelers that credit card benefits and membership perks remain intact.
The decision follows a tumultuous period for Spirit, whose stock has plummeted 97% since late 2018. A failed merger with JetBlue and rising operational costs, including labor expenses, compounded the financial strain. Despite an increase in passenger volume this year, revenue per mile has dropped sharply due to falling ticket prices and increased competition.
Spirit’s CEO, Ted Christie, emphasized the airline’s focus on addressing its debt and rolling out new services to attract customers. The carrier recently introduced bundled fares that include premium features such as larger seats, priority boarding, and complimentary snacks—a significant shift from its traditional no-frills model.
Operational challenges have also added pressure. The airline has been forced to ground aircraft due to required repairs on Pratt & Whitney engines, leading to pilot furloughs. Additionally, Spirit has cut its flight schedule by nearly 20% for the final quarter of 2024 in an effort to stabilize fares, though analysts suggest competitors like Frontier, JetBlue, and Southwest stand to benefit from the reductions.
The bankruptcy follows a historical trend of U.S. airline insolvencies in the face of industry challenges. Spirit now joins a list of carriers that have used Chapter 11 to restructure debts and stay in operation, a tactic last employed by American Airlines in 2013.
While Spirit navigates these financial and operational hurdles, the airline has committed to maintaining service for its customers as it works to stabilize its future.