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Miramar, FL - Miramar-based Spirit Airlines announced Monday that it's filed for Chapter 11 bankruptcy to restructure its operations amid $2.5 billion in pandemic-related losses and rising competition.
Spirit Airlines, the largest U.S. budget carrier, announced Monday that it has filed for Chapter 11 bankruptcy protection in an effort to restructure its operations and recover from mounting financial challenges exacerbated by the pandemic and a failed merger with JetBlue.
Since 2020, Spirit has faced significant losses, totaling more than $2.5 billion, while grappling with $1 billion in upcoming debt obligations.
Despite the bankruptcy filing, the Florida-based airline assured customers that operations will continue as usual, with all tickets, loyalty points, and affiliated credit card perks remaining valid.
The airline’s financial difficulties stem from multiple factors, including rising labor costs and increased competition from major carriers offering stripped-down fares.
Additionally, a surplus of flights has led to a decline in U.S. leisure travel fares—Spirit’s core market.
Passengers are flying more on Spirit but paying less. In the first half of this year, passenger miles increased by 2%, but revenue per mile from fares dropped nearly 20%.
These trends have pushed the airline further into the red.
CEO Ted Christie has emphasized Spirit’s focus on refinancing debt, improving liquidity, and rolling out new product offerings, including bundled fares with added perks like bigger seats, priority boarding, free bags, and internet access.
This marks a shift from Spirit’s long-standing strategy of ultra-low fares and unbundled pricing.
Spirit is taking an unusual step by cutting its October-to-December flight schedule by 20% compared to the same period last year, aiming to stabilize fares.
Analysts, however, predict the reduction will benefit competitors such as Frontier, JetBlue, and Southwest, which share many overlapping routes with Spirit.
The airline’s operations have also been hampered by mandatory repairs to Pratt & Whitney engines, grounding dozens of its Airbus jets and leading to pilot furloughs.
Despite these challenges, Spirit’s young fleet has made it an attractive takeover candidate.
Spirit’s bankruptcy follows a series of failed merger attempts.
In 2022, Frontier Airlines sought to merge with Spirit but was outbid by JetBlue.
However, the $3.8 billion JetBlue deal was blocked by the Department of Justice, which argued it would harm competition and drive up fares.
The deal was ultimately dropped in early 2024 after a federal judge sided with regulators.
Spirit’s bankruptcy is part of a prearranged plan to stabilize its financial position, a move reminiscent of past U.S. airline bankruptcies in the 1990s and 2000s.
Many carriers—including Delta, United, and American Airlines—used Chapter 11 to renegotiate debts and remain operational.
The last major airline bankruptcy concluded in 2013 when American Airlines emerged from Chapter 11 and merged with US Airways.
Spirit now joins the list of carriers navigating bankruptcy, seeking to reshape its future in an evolving and fiercely competitive industry.