NEWS: Major Budget Airline Files for Bankruptcy

An iconic airline has filed for bankruptcy!

©Spirit Airlines

Spirit Airlines, the pioneering budget airline, filed for bankruptcy protection in November of 2024. According to CNBC, on November 18th, the carrier “reached a prearranged deal with its bondholders, including $300 million in debtor-in-possession financing, to help it through the bankruptcy, which it said it expects to exit in the first quarter of next year. Spirit said vendors and aircraft lessors will not be impaired. Spirit listed its assets and liabilities between $1 billion and $10 billion, in a court filing.”

Despite revolutionizing the airline industry, Spirit has run into several major issues in recent years, including an engine recall that grounded dozens of its jets, a post-pandemic surge in operating costs after the pandemic, and the failure of a planned merger with JetBlue, which was blocked by a federal judge on antitrust grounds earlier this year. All of these issues have crippled the company financially, and in turn, the airline hasn’t turned a profit since 2019, losing more than $335 million in the first half of this year. As a result, shares have fallen more than 90% this year.

In an open letter addressed to Spirit passengers, CEO Ted Christie wrote about the bankruptcy.

The letter begins with an explanation of the situation, with Christie describing a “proactive step Spirit has taken to position the company for success. Spirit has entered into an agreement with our bondholders that is expected to reduce our total debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value. Part of this financial restructuring includes filing a “prearranged” chapter 11.”

©Spirit Airlines

The letter goes on to assure guests of three main points:

You can use all tickets, credits and loyalty points as normal.
You can continue to benefit from our Free Spirit loyalty program, Saver$ Club perks and credit card terms.
Our amazing Team Members are here to offer you excellent service and an elevated experience.

Finally, the letter wraps with a relatively optimistic tone for the carrier’s future, with Spirit saying they “expect to complete this process in the first quarter of 2025 and emerge even better positioned to deliver the best value in the sky. Other airlines that are operating successfully today have undertaken a similar process.”