Spirit Airlines Officially Files for Chapter 11 Bankruptcy Protection

Spirit Airlines has officially filed for Chapter 11 bankruptcy protection following weeks of speculation that the budget airline was in dire financial straits after its proposed merger with Frontier Airlines fell apart.

CNBC reports that as part of a prepared agreement, the low-cost airline’s bondholders agreed to provide $300 million in debtor-in-possession financing to help it get through its bankruptcy, which it anticipates ending in the first quarter of 2025. Vendors and aircraft lessors will not be impeded, Spirit stated.

As the hectic holiday season draws near, the airline said it expects to continue operating regularly and advised passengers to keep making reservations.

“The most important thing to know is that you can continue to book and fly now and in the future,” Spirit Airlines CEO Ted Christie said in a letter to customers on Monday, Nov. 18. He also assured customers that they can still use tickets, credits, and loyalty points normally.

Following American Airlines’ Chapter 11 filing 13 years prior, Spirit Airlines is the first significant U.S. carrier to do so.

The airline, based in Dania Beach, Florida, had to contend with an engine recall that caused dozens of its aircraft to be grounded, a spike in expenses following the COVID-19 pandemic, and the demise of its proposed takeover by JetBlue Airways, which was halted earlier this year by a federal judge on antitrust grounds. This year alone, its shares dropped by 90%.

Spirit Airlines Was Headed Toward Bankruptcy

Last week, sources close to the budget airline noted that it was in advanced talks to file for bankruptcy.

According to Bloomberg, Spirit Airlines’ stock fell by 47% after the news of the discussions was originally published by The Wall Street Journal. Additionally, according to an official announcement, the airline acknowledged that it would not be “able to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Q3 2024 Form 10-Q”) by the prescribed due date without unreasonable effort or expense.”

Just months after the Department of Justice officially blocked JetBlue’s nearly $4 billion acquisition of the low-cost airline in March, Spirit Airlines reportedly resumed talks about a potential merger with rival ultra-low-cost carrier Frontier Airlines, which have since been canceled, according to Simple Flying.