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Spirit Airlines, the nation’s largest budget carrier, has filed for Chapter 11 bankruptcy protection, aiming to restructure its substantial debt and navigate the challenges of a fiercely competitive airline industry. The Miramar, Florida-based airline has reported over $2.5 billion in losses since 2020 and faces more than $1 billion in debt payments due within the next two years.
Despite the bankruptcy filing, Spirit plans to maintain normal operations, assuring passengers that flight bookings and loyalty programs will continue without interruption. The airline has secured a $350 million equity investment and will convert $795 million of debt into stock, complemented by a $300 million loan to aid restructuring efforts.
The COVID-19 pandemic significantly impacted Spirit’s financial health, with a slower recovery in passenger demand compared to other carriers. Increased competition from larger airlines offering discounted fares and rising operational costs have further strained the airline’s finances. Additionally, required engine repairs have grounded many of Spirit’s jets, exacerbating operational challenges.
Earlier this year, Spirit’s planned merger with JetBlue Airways was blocked by a federal judge over antitrust concerns, eliminating a potential avenue for financial stability. Subsequent merger talks with Frontier Airlines also fell through, leaving Spirit to explore other restructuring options.
As part of its restructuring strategy, Spirit has announced plans to reduce its flight schedule by nearly 20% in the upcoming months, aiming to stabilize operations and improve financial performance. The airline anticipates emerging from bankruptcy in early 2025, focusing on reducing debt and enhancing customer value.
Spirit’s bankruptcy filing marks the first major U.S. airline bankruptcy since American Airlines in 2011.