Spirit Airlines files for bankruptcy again but vows to keep flying

A Spirit Airlines 319 Airbus taxis at Manchester Boston Regional Airport, Friday, June 2, 2023, in Manchester, N.H. (AP Photo/Charles Krupa, File)

Budget carrier Spirit Airlines said Friday that it has filed for fresh bankruptcy protection months after emerging from a Chapter 11 reorganization.

The ultra low-cost airline said it plans to keep flying as usual during the restructuring process, meaning passengers can still book trips and use their tickets, credits and loyalty points. Employees and contractors will also continue to get paid, the company said.

CEO Dave Davis said the airline’s previous Chapter 11 petition focused on reducing debt and raising capital, and since exiting that process in March, “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.”

Flight attendants, meanwhile, were warned by union leaders to “prepare for all possible scenarios.”

“We are being direct because even as we have many ways to fight because of our union, we also want to get you the truth about the situation at our airline and how each of us can take actions to protect and prepare ourselves for any challenge,” the Association of Flight Attendants said Friday in a letter to its members.

Spirit, known for its bright yellow planes and no-frills service, has had a rough ride since the COVID-19 pandemic, struggling to rebound amid rising operation costs and its mounting debt. By the time of its first Chapter 11 filing in November, Spirit had lost more than US$2.5 billion since the start of 2020.

The airline now carries $2.4 billion in long-term debt, most due in 2030, and reported a negative free cash flow of $1 billion at the end of the second quarter.

Friday’s news comes as budget carriers like Spirit are under pressure by bigger airlines, which have rolled out their own low-cost offerings. Spirit, meanwhile, is attempting to tap into a growing market for more upscale travel with its new tiered pricing that includes more perks on the higher end.

But in a quarterly report issued earlier this month, Spirit Aviation Holdings, the carrier’s parent company, revealed that it had “substantial doubt” about its ability to stay in business over the next year. The company cited “adverse market conditions” the company faced after its most recent restructuring.

That included poor demand for domestic leisure travel and “uncertainties in its business operations” that the Florida company expected to continue through at least the end of 2025.

Spirit’s cost-cutting efforts continued after emerging from bankruptcy protection in March, including plans to furlough about 270 pilots and downgrade some 140 captains to first officers in the coming months.

Those changes, which go into effect Oct. 1 and Nov. 1, were tied to expected flight volumes in 2026, the company has said. They also follow previous furloughs and job cuts before the company’s bankruptcy filing last year.

Despite the cuts, Spirit has said it needs more cash. As a result, the company said it was considering selling off certain aircraft and real estate.

Spirit’s fleet is relatively young, which has made the airline an attractive target. But buyout attempts from budget rivals like JetBlue and Frontier were unsuccessful both before and during Spirt’s first bankruptcy process.

Spirit operates 5,013 flights to 88 destinations in the U.S., the Caribbean, Mexico, Central America, Panama and Colombia, according to travel search engine Skyscanner.net.

By Rio Yamat.