Spirit 
Spirit customers being strapped for cash. Weighed down by debt and struggling to compete with larger rivals, Spirit Airlines filed for bankruptcy yesterday in New York after years of falling sales and failed mergers.
Don’t panic if you already have flights booked. Those yellow planes will still be flying “now and in the future,” the airline said. Spirit is petitioning to enter into the type of bankruptcy deal (chapter 11) that lets business run as usual while the company restructures a mammoth $3.6 billion in long-term debt.
- Spirit has only finished one quarter in the green since the pandemic started, losing more than $2.5 billion over four-and-a-half years.
- On top of that, Spirit is on the hook for $1.1 billion in bonds that it has to refinance by Dec. 23—a two-month extension on an earlier deadline—and must pay back next year.
Flotation device: Bondholders have already pledged new investments and bond-for-equity swaps that would alleviate $795 million in company debt, the Wall Street Journal reported. The airline is aiming to exit bankruptcy in Q1 next year.
Demand isn’t the problem. Even though Spirit flew 2% more passengers in the first half of this year than in the first six months of 2023, the airline took in almost 20% less revenue per mile, per AP.
What went wrong?
Spirit’s bare-bones business model worked for years, but recently it kept the airline from joining the post-pandemic luxury travel boom that’s helped airport royalty like Delta and United survive rising labor costs and supply-chain holdups.
And…most US airlines now offer a maximum-cheapness ticket tier, so scores of cost-conscious travelers have defected from Spirit to basic economy seats on carriers that feel less likely to lose your bag.
Denied: JetBlue was going to buy Spirit Airlines for $3.8 billion, but a federal judge blocked the deal earlier this year over concerns that it would raise airfare prices.—ML