Spirit Airlines filed for bankruptcy protection on Monday after struggling with a series of losses, but travelers should not panic.
The low-cost carrier, which has not reported an annual profit since 2019 and has lost more than $2.2 billion since the start of 2020, reassured its customers that flights would be taking off as scheduled and travelers could continue to book tickets. Many companies, including major airlines, have emerged from Chapter 11 bankruptcy — a process that allows a company to financially restructure while still operating — on stronger footing.
Spirit’s decision to file for bankruptcy protection comes after it recently failed to renegotiate its debt. It had struggled to capitalize on the recovery from the pandemic, in part because of engine problems and increased competition, and was dealt a blow after a federal judge blocked a planned merger with JetBlue Airways this year.
Here’s what else travelers should know about the bankruptcy filing:
What’s next in Spirit’s Chapter 11 bankruptcy?
Spirit filed for Chapter 11 bankruptcy protection in New York, which will allow the company to continue to operate as it restructures its debts under court supervision. Often called reorganization bankruptcy, this process grants a company legal protection as it looks to cut costs and reduce its total debt.
Spirit had 25,000 to 50,000 creditors and total debt of about $9 billion at end of September, according to a court filing.
The company said it expected to exit the bankruptcy process in the first quarter of next year. In the meantime, Spirit has an agreement with bondholders to restructure its debts and raise money to help it operate, the company said. The airline insisted it would “emerge even better positioned” after the bankruptcy proceedings wrapped up.
Spirit’s Chapter 11 filing is the first by a major airline in more than a decade. But it’s far from unusual: Airlines have filed for bankruptcy more than 180 times in recent decades, according to data from Airlines for America, a trade group. That includes American Airlines, Delta Air Lines and United Airlines, three of the biggest companies in the industry, all of which are still operating and have reported profits in recent quarters.
Will my flight be affected?
People traveling with Spirit should not expect major disruptions to their plans in the coming weeks. For now, there is no indication that the airline’s operations will be severely disrupted because of the bankruptcy process, a reassurance for the millions of Americans who will be traveling for Thanksgiving.
In an open letter released on Monday, the airline said that customers could “use all tickets, credits and loyalty points as normal.” Frequent-flier miles should also be protected.
But travelers should generally be aware of potential cutbacks to service as the company looks to slash costs and reduce its operating footprint. That might not come as a surprise to those who have turned to Spirit for low-cost fares in recent months; the company has already started to scale back its operations. Spirit’s recent cost-cutting measures have included delaying delivery of new Airbus planes and furloughing pilots. Any additional steps to save money would add to those already in effect.
In the event that a Spirit flight is canceled, travelers are entitled to refunds under guidelines finalized by the Department of Transportation this year. Fliers are also eligible for refunds for significant flight delays: more than three hours on a domestic trip or six hours on an international one.
It is possible that Spirit could once again attempt to merge with another airline, especially given expectations that the incoming Trump administration could ease up on antitrust enforcement, including for airline deals. But any fresh bid for an acquisition is not poised to affect travelers in the near future.
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