Spirit Airlines is considering filing for reorganization bankruptcy, according to a Wall Street Journal report.
Per the report, the ultra-low-cost carrier (ULCC) seeks to address impending debt maturities within its reported $3.3 billion debt load, including more than $1.1 billion of secured bonds that are due in less than a year.
“Spirit also faces a deadline from its credit card processor to refinance or extend those notes by Oct. 21,” the report stated.
The airline has engaged in talks with bondholders and other creditors to support a chapter 11 filing. The filing is not expected to be imminent.
A case filed under chapter 11 of the U.S. Bankruptcy Code, frequently referred to as a “reorganization” bankruptcy, would allow for Spirit to continue to operate its business and borrow new money with court approval. For this to happen, a plan of reorganization would be proposed, and creditors whose rights are affected would vote on it. The court would then be in charge of confirming the elected plan.
When asked for a statement on the possible bankruptcy filing, Spirit emailed the following comment from CEO Ted Christie during the carrier’s August earnings call:
“Before we get into the results, I want to note that we are engaged in productive conversations with the advisors of our bondholders to address the upcoming debt maturities. Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes. Needless to say, it is a priority, and we are focused on securing the best outcome for the business as quickly as possible, while staying focused on driving performance and implementing our new travel options and elevated guest experience.”
Spirit has faced a number of challenges over the last several years. The carrier removed up to 35 routes after reporting a net loss of nearly $200 million in the second quarter of 2024. In an attempt to stop the financial bleeding, Spirit trimmed its workforce with approximately 260 pilot furloughs on September 1.
Ongoing Pratt & Whitney GTF engine issues haven’t helped the situation, and the airline expects to end the year with 20% of its entire fleet grounded. To add to the carrier’s misfortune, a federal judge struck down a proposed $3.8 billion merger between JetBlue and Spirit earlier this year. The two terminated their merger agreement in early March.
