Spirit Airlines avoids liquidation after second bankruptcy
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A Spirit Airlines jet lands at Los Angeles International Airport after arriving from Las Vegas on Jan. 29. Photo: Kevin Carter/Getty Images
Spirit Airlines has reached a deal to avoid liquidation.
Why it matters: The budget carrier filed for Chapter 11 bankruptcy protection in August for the second time in less than a year, aiming to stay in business despite numerous business challenges.
- Spirit had about 25,000 direct employees and independent contractors as of August, including 3,100 pilots, 5,300 flight attendants and 600 aircraft maintenance technicians.
Driving the news: The airline confirmed Tuesday that it has lined up support from key creditors to emerge from bankruptcy as a slimmed-down independent operation.
- "The agreement in principle will provide Spirit with the financial support needed to finalize its restructuring and complete the remaining changes necessary to optimize the Company's fleet, network and cost structure," the airline said in a statement.
- The company expects to emerge from bankruptcy in the late spring or early summer after slashing its debt and lease obligations from $7.4 billion to about $2.1 billion.
By the numbers: Spirit had 3.9% market share in domestic passenger miles during the 12-month period ending in September, making it the seventh largest domestic operator.
- Delta, American, Southwest and United collectively had 68.5%.
State of play: The ultra-low-cost carrier has maintained its operations and continued accepting bookings after filing its second bankruptcy in what restructuring experts coyly call Chapter 22.
- 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.
- CEO Dave Davis said at the time that "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."
Zoom out: Spirit had warned last summer 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.
- "They've had everything from labor relations problems to trying to manage costs, publicity, service issues, and of course the intense competition that the airlines have gone through," Georgetown University business professor and aviation executive Shye Gilad told Axios.
Flashback: Spirit 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 had rejected a proposal to merge with Frontier Group.
Editor's note: This article was updated with a statement from Spirit Airlines
