Spirit Airlines Makes Major Move After Second Bankruptcy Filing
Last year, Spirit Airlines filed for bankruptcy for a second time in 12 months. However, it sounds like the airline has successfully reached a deal to emerge from bankruptcy just a few months later, but there's a catch.
While the deal will allow Spirit Airlines to survive when it was on the brink of going out of business, it also means that the airline will be moving forward as a smaller company.
Spirit's Financial Woes
Back in August, Spirit Airlines filed for bankruptcy for the second time in a year as a result of some financial woes.
“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” Spirit CEO Dave Davis said back in August. “After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success.”
At the time, Davis said that Spirit was “moving away from the elements of the business that no longer work,” including “strategically growing our network in stronger markets with more opportunities and making some difficult decisions like re-evaluating unprofitable routes.”
The airline continued to struggle for months and appeared to be on the brink of a sudden collapse back in December, but it obviously survived.
Spirit Reaches New Deal
Spirit Airlines announced on Tuesday that it made an agreement with creditors that will allow it to emerge from bankruptcy later this spring or early summer.
“Spirit will emerge as a strong, leaner competitor that is positioned to profitably deliver the value American consumers expect at a price they want to pay,” CEO Dave Davis said in a statement via CNN.
Following the bankruptcy filing, Spirit will emerge as a much smaller company as the airline has sold aircraft and gates to raise cash and reduce debt. It has also has significantly cut staff and its schedule.
This upcoming summer travel season, Spirit will offer nearly 40% fewer flights and seats than during the same period in 2024, according to data from aviation analytics firm Cirium.
Remaining Independent
While many airlines are often forced to liquidate, sell, or merge with other larger airlines as part of bankruptcy agreements, this agreement will allow Spirit to continue operating independently.
Spirit has previously had multiple deals in place to merge with other airlines. However, both of those deals fell through.
In February 2022, Spirit agreed to merge with Frontier Airlines, another ultra-low cost carrier. But that deal fell apart when JetBlue Airways came in with a higher bid preferred by Spirit shareholders. However, its deal with JetBlue fell apart after it was blocked by a federal judge in January 2024.