Ultra-low-cost carrier Spirit Airlines, which is credited for popularizing budget air travel, has filed for bankruptcy at a New York bankruptcy court following years of mounting losses and struggles to keep up with the rising competition. However, the airline will still keep operating thanks to $300 million in debtor-in-possession financing from its existing lenders.
Spirit was slow to recover from the pandemic and kept on facing one issue after another. It attempted to solve them by agreeing to a merger with rival JetBlue Airways before having the deal blocked by regulators. It currently has around $9 billion in debt and hasn’t been profitable since 2019.
The company now expects that the bankruptcy process will allow it to reduce its debt and increase its financial flexibility before emerging in the first quarter of 2025.
Spirit said in a statement that the passengers won’t be affected by Chapter 11 filing.
“Spirit expects to continue operating its business in the normal course throughout this prearranged, streamlined chapter 11 process. Guests can continue to book and fly without interruption and can use all tickets, credits, and loyalty points as normal,” said the company.
Spirit’s stock has been delisted from the New York Stock Exchange as a result of filing. It was previously 94% down year-to-date.