Budget carrier Spirit Airlines said Friday that it has filed for fresh bankruptcy protection months after emerging from a Chapter 11 reorganization.
The budget airline announced plans to continue operations as normal during its restructuring phase. Customers can still purchase flights and use their current tickets, credits, and loyalty rewards. Additionally, the airline assured that its employees and contractors will remain on the payroll.
CEO Dave Davis highlighted that the airline’s earlier Chapter 11 filing aimed to cut down debt and raise funds. However, since concluding that phase in March, it’s evident that more efforts and strategies are needed to strengthen Spirit’s future position.
Flight attendants, meanwhile, were warned by union leaders to “prepare for all possible scenarios.”
The Association of Flight Attendants communicated directly with its members, acknowledging both the advantages of union support and the realities at Spirit. They stressed the importance of staying informed and proactive to handle any potential challenges facing the airline.
Recognizable by its striking yellow planes, Spirit has faced significant hurdles post-COVID-19, dealing with rising operational costs and increasing debt. By the time of its initial Chapter 11 bankruptcy filing last November, the airline had incurred losses exceeding $2.5 billion since 2020.
Currently, Spirit holds $2.4 billion in long-term debt, with the bulk due by 2030, alongside a negative free cash flow of $1 billion reported at the end of the second quarter.
This announcement occurs as budget airlines, including Spirit, face competitive pressures from larger airlines introducing their own low-cost options. In response, Spirit is trying to capture a segment of the upscale travel market with a new tiered pricing model that offers additional benefits in the higher-priced categories.
But in a quarterly report issued earlier this month, Spirit Aviation Holdings, the carrier’s parent company, revealed that it had “substantial doubt” about its ability to stay in business over the next year. The company cited “adverse market conditions” the company faced after its most recent restructuring.
That included poor demand for domestic leisure travel and “uncertainties in its business operations” that the Florida company expected to continue through at least the end of 2025.
Spirit’s cost-cutting efforts continued after emerging from bankruptcy protection in March, including plans to furlough about 270 pilots and downgrade some 140 captains to first officers in the coming months.
Those changes, which go into effect October 1 and November 1, were tied to expected flight volumes in 2026, the company has said. They also follow previous furloughs and job cuts before the company’s bankruptcy filing last year.
Despite the cuts, Spirit has said it needs more cash. As a result, the company said it was considering selling off certain aircraft and real estate.
Spirit’s fleet is relatively young, which has made the airline an attractive target. But buyout attempts from budget rivals like JetBlue and Frontier were unsuccessful both before and during Spirit’s first bankruptcy process.
Spirit operates 5,013 flights to 88 destinations in the U.S., the Caribbean, Mexico, Central America, Panama and Colombia, according to travel search engine Skyscanner.net
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