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Spirit Airlines declared bankruptcy Monday , but your holiday travel plans shouldn’t be affected. The budget airline announced it was filing for chapter 11 bankruptcy protection in order to restructure over $1 billion worth of debt, according to court documents. Spirit says Chapter 11 proceedings are “expected to reduce Spirit’s debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.
” The announcement comes after a string of quarterly losses and failed merger attempts with Frontier and JetBlue . The company’s stock has cratered over the course of the year and is expected to be delisted from the New York Stock Exchange. With Thanksgiving just over a week away and Christmas soon after that, how will this affect flyers? It shouldn’t, according to Spirit, who, to be clear, is not going out of business.
Here’s what you need to know: Can I still fly on flights I booked with Spirit? Yes. Guests can expect to fly as normal throughout the Chapter 11 process, and this includes any flights that have already been booked. Can I book future flights on Spirit? Also yes.
Nothing on the consumer side should change. You can continue to book flights and fly on them as you would normally. However, though Spirit does not expect the process itself to impact its employees wages or benefits, it already announced layoffs in October in addition to selling some of its planes as part of cost-cutting measures.
It is unclear what affect this might have on delays of Spirit flights, which have a 74% on-time percentage, the third-worst this year ahead of Frontier and JetBlue, according to a Department of Transportation report. The Points Guy also reported earlier this month that Spirit will be cutting some routes , including to and from DFW, and any affected flyers are eligible for full refunds or rerouting. Will my loyalty points be honored? Any loyalty points, credits or tickets already possessed will be honored, and Spirit has not announced any changes to its loyalty program as part of cost-cutting measures.
When will the bankruptcy process end? Spirit says it expects to emerge from the Chapter 11 process by the first financial quarter of 2025, which ends on March 31. Monday, Spirit had its first hearing in bankruptcy court, in which it filed motions to continue operating in the normal course of business as it goes through the process. These requests are usually honored, Spirit says.
How can Spirit overcome so much debt? Spirit says it has already received commitments for a $350 million equity investment from existing bondholders and will turn $795 million worth of debt into stock in the restructured company through a deleveraging and equitization process. Spirit also says it has secured a $300 million loan from bondholders that, in addition to Spirit’s own cash reserves, it will use to continue operating through the debt restructuring process. Several other airlines have declared bankruptcy in the past, including industry powers like Delta and United, though Spirit is the first major U.
S. airline to declare bankruptcy in over a decade since American did it in 2011. ©2024 The Dallas Morning News.
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