ALBAWABA - Budget-travel focused Spirit Airlines, which is still struggling to recover from the pandemic-caused travel slump, increased competition from larger carriers, and a botched effort to sell the airline to JetBlue, announced Monday that it has filed for bankruptcy protection with plans to attempt a firm reboot.
Spirit has been struggling with rising operating expenses, heightened competition, and more than $1 billion in impending debt commitments for 2025 and 2026, losing more than $2.5 billion since 2020 according to the Associated Press.
The bankruptcy filing included a deal with bondholders to convert $795 million in debt into shares and invest $350 million in equity. Additionally, a $300 million loan will supply liquidity throughout the reorganization process.
Since late 2018, the airline's stock price has fallen 97%, as concerns grew among investors over its long-term sustainability, CBS News reports. Customers, however, have been assured that flights, reservations, and frequent-flyer programs will not be impacted as Spirit plans to continue operating normally throughout the bankruptcy process.
To strengthen its position, Spirit looked for possible mergers in recent years. In 2022, Frontier Airlines tried to purchase the airline, but JetBlue outbid them. Yet early this year, regulatory pushback led the JetBlue purchase to fall through.
After The Wall Street Journal revealed that the airline was negotiating the conditions of a potential bankruptcy filing with its bondholders, the company's stock fell 25% on Friday.
In August, Spirit's CEO, Ted Christie, indicated that the company was discussing the impending debt maturities with its bondholder advisors. He stated that the airline was working to secure the best feasible contract as soon as possible and referred to the talks as a priority, according to CBS News.
Miramar, Florida-based Spirit Airlines missed the deadline for filing its third-quarter financial results, revealing later that its operating margin is projected to show a larger loss than in the same quarter last year, highlighting its continued financial challenges.
