Spirit Airlines to keep flying after filing for bankruptcy protection
Spirit Airlines has filed for Chapter 11 bankruptcy protection, it said Monday morning.
In an open letter to customers, the budget airline said people can continue to book tickets and fly as normal as it undergoes a financial restructuring.
Spirit has struggled since a planned merger with JetBlue was called off in March after a federal judge blocked it.
Budget airlines have also faced difficulties since the pandemic, as passengers appear to prefer paying extra for more comfortable flights.
The Wall Street Journal reported last week that the airline was planning to file for bankruptcy protection.
That came after Spirit's October announcement that it planned to furlough hundreds of pilots and raise just over $500 million by selling about 10% of its planes.
Earlier this month, The Points Guy reported that the airline cut 24 routes while adding seven others.
Monday's announcement said Spirit entered the bankruptcy process to implement a restructuring support agreement.
It added that the restructuring aims to reduce debt and give travelers greater value.
In its voluntary petition to the Bankruptcy Court for the Southern District of New York, Spirit said it had $9.49 billion of total assets and $8.99 billion of total debts.
In connection with the restructuring agreement, Spirit said its bondholders had given backstopped commitments for a $350 million equity investment. It also plans to equitize $795 million of funded debt.
The existing bondholders are also providing $300 million in debtor-in-possession financing to support the company through the process.
Spirit expects to emerge from the streamlined Chapter 11 process in the first quarter of next year.
"I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalization of the Company, which is a strong vote of confidence in Spirit and our long-term plan," said Spirit CEO Ted Christie.
He added that the company will continue executing "strategic initiatives to transform our Guest experience, providing new enhanced travel options, greater value, and increased flexibility."
"I'm extremely proud of the Spirit team's hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our Guests," Christie said.
