Spirit Airlines, the largest U.S. budget carrier, has filed for bankruptcy protection as it grapples with financial losses and a failed merger attempt. The airline announced on Thursday (November 17) that it has secured a deal with bondholders for $300 million in financing to aid its journey through bankruptcy, which it aims to exit by early 2025. Spirit Airlines reassured customers that its services will continue as usual and without interruption.
The airline has been struggling with losses exceeding $2.5 billion since the start of 2020 and is facing debt payments totaling more than $1 billion over the next year. The failed attempt to sell the airline to JetBlue has also added to its financial woes. Despite these challenges, Spirit Airlines CEO Ted Christie expressed the company's focus on refinancing its debt, improving its overall liquidity position, and growing its loyalty programs during an earnings call in August.
According to ABC News, Spirit Airlines has also been dealing with rising labor costs, competition from major U.S. airlines offering their own budget tickets, and sagging fares for U.S. leisure travel. The airline has also been affected by required repairs to Pratt & Whitney engines, which has led to the grounding of several of its Airbus jets.
Spirit Airlines' bankruptcy filing marks a significant event in the U.S. airline industry, which has seen several major carriers file for bankruptcy in the past due to competition, high labor costs, and sudden spikes in jet fuel prices.