Spirit Airlines said on Monday that it's filed for bankruptcy protection and will attempt to reboot as it struggles to recover from the pandemic-caused swoon in travel and failed attempts to sell itself to other carriers.
The news came after a failed merger with Jet Blue Airlines and some engine failure causing recall, grounding dozens of its airplanes this alongside with weak sales after pandemic all caused the Spirit Airlines to file for bankruptcy. The company was struggling with huge debt, according to news outlets reporting on the same.
The airlines have said it will make a comeback, it said it is restructuring its business for a long term success.
The company says nothing will change and operations will continue as they are, people will still be able to book flights and fly, with no impact on them. The low rates of flight ticket is a special selling point of the Spirit Airline.
The company published on Monday an open letter to those who've booked tickets for the future. Flights, ticket sales and other operations will continue as normal, the airline said.
Spirit Airline is operational to both domestic flights in US, and international flights, it primarily targets the budget-conscious travellers who are looking for affordable air travel options.
Spirit, the biggest U.S. budget airline, has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totalling more than $1 billion over the next year, obligations it was unlikely to be able to meet. Reported by cbsnews.com.
Brief history about Spirit Airlines:
Spirit Airlines was founded in 1983 as Charter One Airlines in Detroit, Michigan. It began operating as Spirit Airlines in 1992. It is one of the low-cost carrier in the US. The company is based in Florida.
The company has stated that Spirit employee's wages or benefits would also be uneffected by the bankruptcy clause 11.
The bankruptcy was forced on due to several other reasons as reported by media outlets in the US stating, “increased competition for bargain-seeking airline passengers and the inability to merge with other airlines” became key reasons behind the bankruptcy, reported.
Bankruptcy filing is common for big companies in the US:
The Spirit Airlines filing for the Bankruptcy is not a unique case and other top airlines in the US has in last 25 years have gone through the process including, American Airlines, United Airlines, and Delta and other major US airlines.
Other major companies in the United States have also filed for bankruptcy and emerge stronger in the past, not just in the Airlines business.Spirit released a statement stating, “it will be able to emerge early next year with reduced debt and increased financial flexibility that will position Spirit for long-term success and accelerate investments providing guests with enhanced travel experiences and greater value.” It added that the creditors had agreed to pump an additional $300 million into the airline to fund its operations through the bankruptcy process.
Earlier the airline was trying to merge with Frontier Airlines in 2022 but was outbid by JetBlue. This bid didn't come off well for both the airlines as the Justice Department sued to block the $3.8 billion deal, saying it would drive up prices for Spirit customers who depend on low fares, and a federal judge agreed in January. JetBlue and Spirit dropped their merger two months later.
Spirit is known for its very low base fares, its average domestic round-trip economy fare so far this year is $136, not including taxes and fees, according to data from Cirium, an aviation analytics firm. That’s 61% lower than the US industry’s average, and 69% less than the average on the four major US airlines — American, United, Delta and Southwest, the dropped revenue per ticket has also played its role in the Bankruptcy filing of Spirit.
Earlier the airline was trying to merge with Frontier Airlines in 2022 but was outbid by JetBlue. This bid didn't come off well for both the airlines as the Justice Department sued to block the $3.8 billion deal, saying it would drive up prices for Spirit customers who depend on low fares, and a federal judge agreed in January. JetBlue and Spirit dropped their merger two months later.
Spirit released a statement stating, “it will be able to emerge early next year with reduced debt and increased financial flexibility that will position Spirit for long-term success and accelerate investments providing guests with enhanced travel experiences and greater value.” It added that the creditors had agreed to pump an additional $300 million into the airline to fund its operations through the bankruptcy process.
Other major companies in the United States have also filed for bankruptcy and emerge stronger in the past, not just in the Airlines business.
The Spirit Airlines filing for the Bankruptcy is not a unique case and other top airlines in the US has in last 25 years have gone through the process including, American Airlines, United Airlines, and Delta and other major US airlines.
Bankruptcy filing is common for big companies in the US:
The bankruptcy was forced on due to several other reasons as reported by media outlets in the US stating, “increased competition for bargain-seeking airline passengers and the inability to merge with other airlines” became key reasons behind the bankruptcy, reported.
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