Spirit Airlines, the well-known budget carrier, announced on Friday that it has filed for fresh bankruptcy protection just months after emerging from a previous Chapter 11 reorganization. This ultra low-cost airline reassured its passengers that it intends to maintain regular operations during this restructuring process. Travelers can continue to book flights, use their existing tickets, credits, and loyalty points without interruption. Additionally, employees and contractors will continue to receive their paychecks, the company confirmed.
In a statement, CEO Dave Davis highlighted that the previous Chapter 11 filing aimed to address debt reduction and capital raising. Since the airline exited that process in March, it has become evident that there is still significant work required to position Spirit for a sustainable future. This second bankruptcy filing reflects these ongoing challenges and the need for additional resources.
Amid the turmoil, the Association of Flight Attendants has advised its members to prepare for all possible scenarios. In a letter sent to flight attendants, union leaders emphasized the importance of being informed and ready to tackle any challenges that may arise. They stressed the need for honesty about the current state of the airline and encouraged members to take proactive measures to safeguard their interests.
Spirit Airlines has faced a tumultuous road since the onset of the COVID-19 pandemic. The airline has struggled to recover amidst rising operational costs and a burdensome debt load. By the time of its initial Chapter 11 filing in November, Spirit had incurred losses exceeding $2.5 billion since the beginning of 2020. Currently, the airline carries approximately $2.4 billion in long-term debt, most of which is due in 2030, and reported a negative free cash flow of $1 billion at the end of Q2.
The recent announcement of Spirit’s bankruptcy comes at a time when budget airlines are under increasing pressure from larger carriers that have introduced their own low-cost offerings. In response, Spirit is pursuing a new strategy to capture a growing market segment interested in more upscale travel options. This strategy includes tiered pricing that offers additional perks for customers willing to pay more.
Despite efforts to improve its financial standing, Spirit Aviation Holdings, the parent company of Spirit Airlines, recently expressed substantial doubt regarding its ability to remain in business over the next year. The company cited adverse market conditions following its latest restructuring, including weak demand for domestic leisure travel and uncertainties that are expected to persist at least until the end of 2025.
Following its exit from bankruptcy protection in March, Spirit Airlines has continued to implement cost-cutting measures. This includes plans to furlough approximately 270 pilots and downgrade around 140 captains to first officers in the upcoming months. These changes, effective from October 1 and November 1, are aligned with projected flight volumes for 2026 and follow previous job cuts made prior to the airline's bankruptcy filing.
Despite the ongoing cutbacks, Spirit Airlines has indicated a pressing need for additional funds. As a result, the company is considering selling certain aircraft and real estate assets. The relative youth of Spirit's fleet makes it an attractive target for potential buyers. However, previous acquisition attempts by budget competitors like JetBlue and Frontier have not succeeded, both before and during Spirit's first bankruptcy process.
Currently, Spirit Airlines operates a total of 5,013 flights serving 88 destinations across the U.S., the Caribbean, Mexico, Central America, Panama, and Colombia, as reported by travel search engine Skyscanner.net. This extensive network highlights the airline's commitment to low-cost travel despite the challenges it faces in the competitive aviation market.
