Understanding Spirit Airlines’ Bankruptcy Filing

Spirit Airlines, recognized for its budget-friendly “bare fares,” has filed for bankruptcy in New York early Monday morning. This move raises questions about what it means for travelers planning to book flights with the airline. Despite the filing, CEO Ted Christie assures customers that they may continue to book and fly on Spirit Airlines as the company undergoes restructuring. Importantly, all tickets, credits, and loyalty points remain intact and unaffected by this recent development.

What is a Prepackaged Bankruptcy?

Spirit Airlines opted for a “prepackaged” bankruptcy, a process where the airline and its creditors have already reached an agreement on a restructuring plan. The essence of this plan involves reducing the airline’s debt by nearly $800 million. Additionally, Spirit has plans to resize its operations, which includes selling off airplanes that represent about 10% of their total fleet of 200 aircraft.

The Road Leading to Bankruptcy

The journey to bankruptcy for Spirit was complex, stemming from a $1 billion debt bill that is due in 2025. The pressure to address this financial obligation was immense, and the situation was exacerbated by the collapse of a merger with JetBlue Airways earlier this year, which had been anticipated to strengthen the airline’s position. Quality issues related to their Pratt engines further complicated the airline’s operational efficiency and financial sustainability.

For travelers, the immediate future promises stability with Spirit Airlines. The newly established bankruptcy website, Spirit Go Forward, provides further details and guidance for customers navigating this transitional phase.