Spirit Airlines, famous for its low-cost model, announced last week that it was filing for Chapter 11 bankruptcy in New York, after racking up losses exceeding $2.2 billion since 2020, reports said. American media, including the New York Times. In the United States, this regime allows a company to reorganize itself while continuing its activity.
The company hopes to emerge from the proceedings in the first quarter of 2025 through an agreement with its creditors to restructure its debt and raise funds. Since 2019, Spirit has not recorded an annual profit. In January, a federal judge’s blocking of its merger with JetBlue Airways made the situation worse. The company also suffered technical problems, notably defects on Pratt & Whitney engines, immobilizing part of its fleet.
A debt of nearly nine billion dollars
When it filed for bankruptcy, the company reported $9 billion in debt for slightly more assets. Its shares, which had already lost 90% of their value in 2023, were delisted from the New York Stock Exchange. Spirit operates more than 200 Airbus A320 planes but has had to reduce capacity, with one in ten of its planes grounded due to engine problems.
It predicts up to 67 planes grounded by 2025, despite compensation expected from Pratt & Whitney. To cut costs, Spirit sold planes, delayed deliveries, and put pilots on unpaid leave. The company, which employs around 12,800 people, has ensured that all tickets, credits and loyalty points remain valid. The cabin crew union is committed to defending the interests of employees during the bankruptcy process.
A recovery strategy in question
To regain market share, Spirit tried this summer to diversify its offering with premium services, including more spacious seats, refreshments and baggage benefits. However, these efforts were not enough to reverse the trend.
Spirit is the first major airline to file for bankruptcy in more than a decade, despite a strong post-pandemic recovery. Large carriers like Delta and American Airlines have benefited from demand for international and premium flights, while low-cost carriers like Spirit have suffered from destination saturation and falling fares.
