Last month, Spirit Airlines announced that it had filed for Chapter 11 bankruptcy protection with the U.S. Securities and Exchange Commission under a "prearranged" plan.
In a letter to customers, the airline described this move as a proactive measure that includes a restructuring support agreement to “reduce our total debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments."
The filing is backed and supported by a supermajority of Spirit’s bondholders. As part of the agreement, the carrier has secured:
- $350 million in equity investment from existing bondholders.
- A deleveraging transaction to equitize $795 million of funded debt.
- $300 million in debtor-in-possession financing for existing bondholders, combined with Spirit’s cash reserves and ongoing operational revenues, to sustain operations through the bankruptcy process.
Recent Challenges and the Road Ahead
Spirit’s financial troubles have been compounded by the collapse of its $3.8 billion merger with JetBlue. The U.S. Department of Justice blocked the deal in January 2024 and both carriers abandoned the merger entirely by March.
However, the airline reassures customers that all tickets, travel credits and loyalty points remain valid. Programs like the Free Spirit loyalty program, Saver$ Club perks and Spirit credit card benefits will continue without interruption. Travelers with existing Spirit reservations should look out for notifications about any changes to their itinerary from Spirit as their departure date approaches.
The carrier anticipates completing its restructuring by the first quarter of 2025. Upon emerging from Chapter 11, the airline projects it will be in a stronger position to deliver on its commitment to offering the best value in air travel.
