Image Credit : Spirit Airline
Spirit Airlines announced Monday that it has filed for bankruptcy protection in an effort to stimulate competition from larger vehicles and scrapped an attempt to merge with JetBlue due to the pandemic’s impact on travel.
Spirit, the largest low-cost airline in the United States Filing for Chapter 11 bankruptcy after reaching a compromise with bondholders, Spirit has lost more than $2.5 billion since 2020, and between 2025 and 2026 will have more than $1 billion in debt service costs.
Despite filing for bankruptcy, Spirit has assured customers that normal operations will continue throughout the process. Passengers will still be able to book flights. Use a frequent flyer program and employees and vendors will continue to receive payments as normal.
The airline received a $350 million investment from existing bondholders. and will convert $795 million of debt into equity in the restructured company. In addition, bondholders will extend $300 million of debt to support the airline through the restructuring process. Augmented by Spirit’s remaining cash reserves…
The company also missed a deadline to file third-quarter financial statements, which revealed its profit margins. This performance will reflect a larger loss compared to the same period last year.
The bankruptcy is the latest setback for Spirit Airline, whose shares have fallen 97% since the end of 2018, when it remained profitable. CEO Ted Christie said in August that The airline has spoken with bondholder advisers regarding upcoming debt maturities. and stressed the need to get the best possible deal to secure the airline’s future.
