Budget travel icon Spirit Airlines files for bankruptcy protection after mounting losses

Spirit Airlines, an icon of fund aerial question that reshaped the industry, has filed for bankruptcy extortion aft years of mounting losses, a failed merger and much demanding user tastes.

The bearer aboriginal Monday said it reached a prearranged woody with its bondholders including $300 cardinal successful debtor-in-possession financing. It said that vendors, craft lessors volition not beryllium impaired.

The hose said it expects to proceed operating usually and said customers tin proceed to book. It said it expects to exit bankruptcy extortion successful the archetypal 4th of adjacent year.

"The astir important happening to cognize is that you tin proceed to publication and alert present and successful the future," Spirit CEO Ted Christie said successful a missive to customers connected Monday. He said customers tin usage tickets, credits and loyalty points "as normal."

The Dania Beach, Florida-based hose had struggled with an engine recall that grounded dozens of its jets, a surge successful costs aft the pandemic, and the nonaccomplishment of its planned acquisition by JetBlue Airways, which was blocked by a national justice earlier this twelvemonth connected antitrust grounds. Its shares are down much than 90% truthful acold this year.

Spirit is the archetypal large U.S. hose to record for Chapter 11 since American Airlines 13 years ago.

The hose had repeatedly pushed backmost a deadline with its recognition paper processor to renegotiate a $1.1 cardinal indebtedness owed adjacent twelvemonth oregon hazard losing the quality to process those transactions.

Last week, Spirit said it had to hold its quarterly filing and said it was successful discussions for a woody with a bulk of creditors that would not impact customers, vendors, suppliers and others, but that it would "lead to the cancellation of the Company's existing equity."

Spirit said successful the filing that it expects its third-quarter margins to beryllium 12 percent points little than during the aforesaid play a twelvemonth agone and that income were $61 cardinal little than past year, portion costs surged and fares slipped.

The hose hasn't had a nett since 2019 and mislaid much than $335 cardinal successful the archetypal fractional of the year.

To effort to marque up the difference, it has sold dozens of jets to enactment up cash, which has worked successful its favour since planes are successful abbreviated proviso this year. Most recently, it sold 23 Airbus craft to GA Telesis to make $519 million. Spirit has said it expects to extremity the twelvemonth with astir $1 cardinal successful liquidity.

The institution besides plans to furlough different 330 pilots successful January connected apical of astir 200 successful September arsenic it slashed routes. But analysts expect the bearer volition person to shrink further successful bankruptcy to get a grip connected costs.

Spirit's concern exemplary of offering rock-bottom fares and fees for everything from spot assignments to compartment baggage was a occurrence with bargain-hunting customers, allowing it to grow implicit much than a decade.

Its bare-bones work became a favourite punchline for stand-up comics. A greeting card featuring 1 of the carrier's yellowish planes adjacent states: "I would alert Spirit Airlines for you."

The low-fare and add-on-fee exemplary sparked akin offerings from larger carriers similar Delta, American and United, which rolled retired basic system fares.

Spirit struggled aft the pandemic, however, erstwhile costs roseate passim the manufacture and lifted question restrictions sparked a surge successful bookings for planetary trips extracurricular of Spirit's network. Fares fell successful the oversupplied U.S. market.

Spirit this summertime started offering bundled fares with spot assignments and different perks, arsenic good arsenic a benignant of "first-class" that included larger seats astatine the beforehand of the level arsenic galore travelers person opted to wage much for much spacious seats connected board.

In January, a national justice blocked JetBlue's $3.8 billion planned acquisition of Spirit. Spirit had antecedently had a woody to merge with chap fund hose Frontier earlier JetBlue swooped successful with a bid successful April 2022. Spirit shareholders backed the JetBlue all-cash offer.

Judge William Young, who was appointed by erstwhile President Ronald Reagan, said the JetBlue woody would thrust up fares and trim competition. The airlines had argued it would assistance them amended compete, particularly successful the U.S. wherever 4 airlines power astir three-quarters of the market.

"Spirit is simply a tiny airline. But determination are those who emotion it," Young wrote successful his ruling. "To those dedicated customers of Spirit, this one's for you."