Spirit Airlines announced Monday that it would file for Chapter 11 bankruptcy protection after its effort to merge with other airlines was cut short.
The announcement from the budget airline has many wondering what impact it may have on low-cost travel now that Spirit’s game plane appears to have failed, with it incurring hundreds of millions of dollars in debt.
The airline has reported losses in 17 of its last 18 quarters, with $336 million lost in the first half of 2024. In total, the company has $1.1 billion in debt payments due in 2025.
Spirit found itself filing for bankruptcy after a $3.8 billion deal with JetBlue was blocked by a federal judge, and a deal prior that would have seen it combine with Frontier Airlines fell apart.
Attorney General Merrick Garland had praised the failure of the JetBlue deal, saying it would have led to “higher fares and fewer choices” for customers. Spirit CEO Ted Christie didn’t agree, saying that the deal would have saved “hundreds of millions for consumers and create a real challenger to the dominant Big 4 U.S. airlines.”
But the bankruptcy filing from Spirit doesn’t necessarily mean an end to cheap flights, as Spirit will look to its fellow airlines, mainly American and United, who have gone through bankruptcy and emerged stronger.
The company shared that its reorganization plan has the support of a super-majority of its bondholders and that it expects to emerge from Chapter 11, debt restructuring, rather quickly.
It also noted that when it emerges from bankruptcy in early 2025, it will have reduced its debt and increased financial flexibility to “position Spirit for long-term success and accelerate investments providing guests with enhanced travel experiences and greater value.”
So, what does this mean for consumers who are looking for cheaper prices while flying?
At this time, the airline is continuing to operate like it’s business as usual.
“Guests can continue to book and fly without interruption and can use all tickets, credits, and loyalty points as normal,” it said in a statement.