What Happens Now That Spirit Airlines Has Filed for Bankruptcy?

18.11.2024 - 17:17 / travelandleisure.com / Spirit Airlines / U.S.Airlines / Ted Christie

Spirit Airlines, known for its cheap “bare fares” and fees for everything from carry-on bags to water, filed for bankruptcy in New York early Monday morning.

The airline’s CEO Ted Christie, in a letter to travelers, wrote that customers “can continue to book and fly” on Spirit Airlines as it restructures. All tickets, credits, and loyalty points are unaffected, he added. Travelers can learn more on a special bankruptcy website the airline created, Spirit Go Forward.

Spirit filed what is known as a “prepackaged” bankruptcy, or where the carrier and its creditors have already agreed to a restructuring plan. Spirit’s plan includes slashing debt by nearly $800 million and shrinking the airline. This includes an already agreed to sale of airplanes that amount to about 10% of its 200-plane-strong fleet.

Spirit’s path to bankruptcy had many twists and turns. The immediate cause is a billion-dollar-plus debt bill due in 2025 that it was under pressure to address. But the filing would have been avoided if its merger with JetBlue Airways had gone ahead as planned. That deal collapsed this past March after it was blocked by a federal judge. Spirit is also suffering from quality issues with the Pratt & Whitney engines on many of its Airbus jets leading to the grounding of dozens of planes.

Travelers with tickets on Spirit are unaffected. As Christie said, the airline continues to operate its schedule as planned. Flight tracking website FlightRadar24 showed more than 90 Spirit flights in the air this morning after the bankruptcy announcement.

Contemporary airline bankruptcies rarely involve a full shutdown and liquidation. American Airlines, the last major U.S. carrier to restructure under Chapter 11, operated its full schedule — and even expanded its network — after it filed for bankruptcy in November 2011.

Spirit, however, is widely expected to shrink as part of its restructuring. It already plans to cut its schedule by roughly 20% compared to last year during the last three months of 2024, and Wall Street analysts expect further cuts next year. 

Conor Cunningham, an airline analyst at Melius Research, wrote in a report Monday shared with Travel + Leisure that the expectation is Spirit will shrink its schedule by another 30-35% next year.

A 35% schedule cut would see Spirit, currently the seventh largest U.S. airline, fall to eighth in size behind Frontier Airlines, schedule data from aviation analytics firm Cirium Diio shows.

Travelers considering booking flights on Spirit should be aware that changes are coming to the airline’s schedule next year. A flight that is on sale now could be canceled but, if that happens, Spirit is still required to offer a full refund or other flight options to travelers even as it