Spirit Airlines files Chapter 11 bankruptcy for second time
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Spirit Airlines signage at LaGuardia Airport in New York on Aug. 19. Photo: Michael Nagle/Bloomberg via Getty Images
Spirit Airlines filed for Chapter 11 bankruptcy protection for the second time in less than a year, aiming to stay in business despite myriad business challenges that made it difficult for the company to compete.
Why it matters; The ultra-low-cost carrier has been grappling with underwhelming demand, excess capacity and too much debt.
Driving the news: Spirit said in a statement that it plans to continue operating and that it is still accepting bookings.
- The company acknowledged that it didn't do enough during its first bankruptcy in late 2024 to fix itself.
- It pledged to use the restructuring process to overhaul its route network, reduce its fleet size, cut other costs and increase premium options for travelers.
- "Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit's funded debt and raising equity capital, 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," CEO Dave Davis said in a statement.
Zoom out: By filing for bankruptcy a second time, the company enters what restructuring advisers colloquially call Chapter 22.
- Spirit had said earlier this month in an SEC filing that "there is substantial doubt as to the Company's ability to continue as a going concern" — a legally required notice when publicly traded companies face a significant deterioration in their finances.
The big question: Will Spirit look for and find a merger partner?
- The company said Friday that it "has been actively engaged with certain of its largest lessors, secured noteholders and key stakeholders as it works to refine its path forward."
- Spirit had arranged a $3.8 billion sale to JetBlue in 2022, but a federal judge blocked that deal in 2024 at the urging of the Biden administration.
- The company more recently rejected a proposal to merge with Frontier Group.
💠Our thought bubble: Major airlines have survived bankruptcies before — including United, American and Spirit itself — but a second trip into Chapter 11 generally carries a greater risk of liquidation.
