Spirit Airlines Files For Bankruptcy Protection
1 week ago
Spirit Airlines has filed for bankruptcy protection, the no-frills U.S. travel pioneer said on Monday, after struggling with years of losses, failed merger attempts and heavy debt levels.
It is the first major U.S. airline to file for Chapter 11 in more than a decade, after a proposed $3.8 billion merger with JetBlue Airways collapsed in January.
The Florida-based airline said it had pre-arranged a deal with its bondholders to restructure its debts and raise money to help it operate during the bankruptcy process, which it expects to exit in the first quarter of 2025.
Intense competition among U.S. carriers for price-sensitive leisure travelers as well as an oversupply of airline seats in the domestic market hit Spirit's pricing power. Its average fare per passenger was down 19% on a year-on-year basis in the first half of this year from a year earlier.
The carrier said it expected to continue operating its business as normal through the proceedings and customers could book and fly without interruption.
The Chapter 11 process will not impact wages or benefits of its employees, it said. Its vendors and aircraft lessors will also continue to be paid and will not be impaired, it added.
The company said it expected to be delisted from the New York Stock Exchange in the near term, and that its shares would be canceled and have no value as part of the restructuring.
Spirit's shares, which have plunged more than 90% this year, were halted on Monday. Shares of rival low-cost carriers Frontier Airlines and JetBlue fell 14% and 6%, respectively.
It is the first major U.S. airline to file for Chapter 11 in more than a decade, after a proposed $3.8 billion merger with JetBlue Airways collapsed in January.
The Florida-based airline said it had pre-arranged a deal with its bondholders to restructure its debts and raise money to help it operate during the bankruptcy process, which it expects to exit in the first quarter of 2025.
Intense competition among U.S. carriers for price-sensitive leisure travelers as well as an oversupply of airline seats in the domestic market hit Spirit's pricing power. Its average fare per passenger was down 19% on a year-on-year basis in the first half of this year from a year earlier.
The carrier said it expected to continue operating its business as normal through the proceedings and customers could book and fly without interruption.
The Chapter 11 process will not impact wages or benefits of its employees, it said. Its vendors and aircraft lessors will also continue to be paid and will not be impaired, it added.
The company said it expected to be delisted from the New York Stock Exchange in the near term, and that its shares would be canceled and have no value as part of the restructuring.
Spirit's shares, which have plunged more than 90% this year, were halted on Monday. Shares of rival low-cost carriers Frontier Airlines and JetBlue fell 14% and 6%, respectively.
