Agencies
The US no-frills carrier Spirit Airlines has filed for bankruptcy protection, it said on Monday, after the company, considered a pioneer in the domestic market, struggled with a long run of quarterly losses, failed merger attempts and looming debt maturities.
The airline, recognized for its bright yellow livery, had been losing money despite strong travel demand as it struggled with higher operating costs.Spirit’s troubles deepened after the collapse of its $3.8 billion planned merger with JetBlue Airways in January and the impact of RTX’s Pratt & Whitney Geared Turbofan (GTF) engines snag that grounded many of its aircraft.
The airline listed its estimated assets and liabilities in the range of $1 billion to $10 billion each, according to a court filing on Monday.Spirit has entered into an agreement with its bondholders that is expected to reduce total debt and provide increased financial flexibility.As part of the prearranged Chapter 11 bankruptcy protection, the airline has received a commitment for a $350 million equity investment from existing bondholders.
Existing bondholders will also provide $300 million in debtor-in-possession with available cash, is expected to support the airline through the Chapter 11 process.
The carrier said it expects to continue its flight operations through the proceedings and customers can book and fly without interruption.Spirit expects to be delisted from the New York Stock Exchange (NYSE) soon.
The company expects to emerge from the Chapter 11 process in the first quarter of 2025.Spirit’s shares, halted for trading on Monday, have plunged more than 90% this year.The airline’s deal with JetBlue was scrapped after a Boston judge blocked the merger on grounds it would harm consumers by reducing competition.
U.S. airlines have seen their costs inflate after the pandemic following a series of new labor contracts fueled by a shortage of experienced workers and increased aircraft maintenance expenses.
