‘Much more work to be done’: US Spirit Airlines files for bankruptcy; operations to continue during process
US Budget airline Spirit Airlines announced on Friday that has filed file for bankruptcy again within a year, but will maintain normal operations, ticket sales and flights.Following its initial bankruptcy filing in November, Spirit had completed a debt restructuring agreement with creditors in March, reducing its liabilities by approximately £800 million.“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” said Spirit President and Chief Executive Officer Dave Davis in a statement on Friday, as quoted by Reuters.The Florida-headquartered company indicated that with this new filing, it “expects to double down on its efforts to” reorganise its routes, “rightsize its fleet,” and seek additional cost-saving measures.Spirit said that “The Chapter 11 process will provide Spirit the tools, time and flexibility to continue ongoing discussions with all of its lessors, financial creditors and other parties to implement a financial and operational transformation of the Company.”In April, Dave Davis from Sun Country Airlines succeeded Ted Christie as the company’s chief executive. Dave Davis, Spirit’s president and CEO, said, “As we move forward, guests can continue to rely on Spirit to provide high-value travel options and connect them with the people and places that matter most.”Still, the company posted a net loss of about $246 million in the three months to end-June. Struggling with a cash crunch, it said last week it had drawn down the full $275 million available under its revolving credit line, as reported by Reuters. Additionally, according to industry analysts and executives, Spirit’s woes trace back to its inability to streamline its inflated cost structure during its first bankruptcy. In the latest quarter, operating expenses reached $1.2 billion—equal to 118 per cent of its revenue.Spirit is also embroiled in a dispute with aircraft lessor AerCap Holdings over a deal for 36 Airbus planes scheduled for delivery in 2027–28. As part of its restructuring plan, the airline said it will scale back operations in select markets and shrink its fleet to meaningfully cut debt and lease liabilities—moves it expects will yield hundreds of millions of dollars in annual operating savings.The low-cost carrier expanded its capacity and market presence following the Covid pandemic but encountered heightened competition from rival airlines.In 2022, competitor Frontier Airlines proposed a £2.9 billion merger with Spirit. Subsequently, JetBlue presented a potentially more valuable offer, but regulatory authorities’ antitrust concerns prevented the deal’s completion.
