Spirit Airlines announced on Monday that it is filing for Chapter 11 bankruptcy.
One of the country's largest low-cost carriers, Spirit operates across 90 destinations in the U.S., Latin America, and the Caribbean. The company stated that it would continue to operate normally while restructuring its debt through the bankruptcy process.
"Guests can continue to book and fly without interruption and can use all tickets, credits, and loyalty points as normal," Spirit said in a press release on Monday.
The company also confirmed that employees would continue to be paid throughout the process.
The Associated Press reported that Spirit faced looming debt payments of more than $1 billion over the next year, following losses of $2.5 billion over the past four years.
"I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalization of the Company, which is a strong vote of confidence in Spirit and our long-term plan," said Ted Christie, Spirit's president and chief executive officer. "This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our Guest experience, providing new enhanced travel options, greater value and increased flexibility.
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Spirt Airlines is known for its low fares, but also for fewer service offerings.
"There's a difference between low service and no service," aviation historian and University of Dayton professor Janet Bednarek told Scripps News. "And (travelers) are increasingly seeing the budget airlines as no service rather than low service, and they're willing to pay a little bit more to get a little bit of service."
While Spirit has struggled, other airlines have successfully bounced back since COVID.
The International Air Transport Association says the industry is en route to record revenue and a record number of scheduled flights this year.
Domestic travel has come back too. This summer, the TSA notched its first-ever day of screening over three million passengers.
"There has been a bounce back from COVID much faster than I ever thought would happen," Bednarek said. And, it's got longevity. It wasn't just, you know, in 2003, it's come into 2024 and it seems like people really do want to travel."
The bankruptcy announcement from Spirit Airlines was foreshadowed last week. Spirit's stock plummeted more than 50% after The Wall Street Journal reported that the airline was preparing to file for bankruptcy.
The bankruptcy filing follows at least two failed attempts to merge with other airlines. Frontier Airlines was first in line in 2022, but JetBlue eventually won favor and was set to merge with Spirit. However, that merger fell through due to opposition from the federal government, which argued it violated antitrust laws. Spirit reportedly renewed efforts to merge with Frontier, but those negotiations were also unsuccessful.