Last November, Spirit Airlines filed for Chapter 11 bankruptcy for the second time overall. It was the first major airline to do so since 2011. They’d had a rough few years, thanks to a failed merger with JetBlue and poor stock market performance. They came out of it in March, vowing to do a “comprehensive restructuring” that would turn a profit. Sadly, Spirit hasn’t had the turnaround that it had hoped for. Last week, the company filed for bankruptcy for the second time in a year. Their new plan also includes “comprehensive restructuring” and downsizing the number of markets in which they fly in an attempt to turn a profit of “hundreds of millions of dollars.”
Spirit Airlines is filing for bankruptcy protection for the second time this year. On Friday, Aug. 29, the budget airline, known for its bright yellow planes, confirmed it has filed for Chapter 11 bankruptcy protection again in the United States Bankruptcy Court for the Southern District of New York. Spirit Airlines previously emerged from Chapter 11 bankruptcy in March [Ed note: After filing in November].
The airline is now “executing a comprehensive restructuring,” according to a news release, which will involve downsizing its fleet — a change they believe will “generate hundreds of millions of dollars.” Guests are expected to be able to continue to “book, travel and use tickets, credits and loyalty points,” while employees will receive their pay and benefits amid the restructuring, per the news release.
However, a focus on “key markets” will result in the airline’s presence being reduced in some areas. The company announced it is also planning to “expand” its premium travel options, one of the product enhancements it previously introduced.
News of the second bankruptcy filing comes after CNBC, citing sources “familiar with the matter,” reported that Spirit had privately contacted rival airlines in an effort to gauge interest in some of its planes.”
It also follows the airline having emerged from Chapter 11 bankruptcy in March, which Spirit CEO Dave Davis addressed in the Aug. 29 press release.
“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” said Davis. “After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success,” the CEO continued.
“We have evaluated every corner of our business and are proceeding with a comprehensive approach in which we will be far more strategic about our fleet, markets and opportunities in order to best serve our Guests, Team Members and other stakeholders,” he added.
Earlier this month, Spirit warned that it may not survive the next 12 months. The airline’s quarterly earnings report, released on Aug. 11, outlined bleak performance amid “weak demand” for travel.
“The company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel,” the report stated — just days after CEO of Spirit rival Frontier Airlines, Barry Biffle, warned about the future of affordable travel.
As a frequent flyer, I have mixed opinions here. Domestic air travel is way too expensive, especially for those who are traveling as a family. If you don’t want to roll the dice, it sucks to then have to factor in the additional cost of buying seats to guarantee that you sit with your kids. The same goes for buying a ticket on boutique airlines like Spirit, Frontier, and Ryanair. The base price is cheap but you pay for everything else a la cart. For a lot of people, including me when I am traveling solo, that’s fine. However, their seats are also uncomfortable and most of the time, they don’t even offer you free water.
All of this goes to say that I understand why Spirit and all of the other ‘budget’ airlines are struggling. They’re playing a dangerous game that they may not be able to win without getting way more money behind them. It’s not an exact comparison, but this reminds me of when streaming services first started replacing cable. Cable/bigger airlines offered the whole package at a jacked-up rate. The streamers/budget airlines like Spirit had great options that targeted just what you needed, but eventually, those additional costs add up, too. If the cost to bring a carry-on bag on a budget airline is going to end up being the same price as the whole package on a bigger airline, then people are going to go for comfort. Plus, wifi is hit-or-miss on those budget airlines. All of this said, I am rooting for them to pull through. I would love it if we could get back to having some real competition for ticket prices.
Photos via Instagram/Spirit Airlines and credit: john mckenna on Pexels
Sigh. Flying really isn’t the same anymore, is it?
I grew up a child of an airline employee back in the days before there were frequent flyer upgrade programs. We had to get dressed up and fly standby, so we were occasionally bumped. But most of the time it was hassle free and we flew for free in first class. It was just the greatest.
Decades later, I admit I am still spoiled by this experience. I have never flown Spirit Airlines, but was nickel and dimed in a horrible experience a few years ago on Frontier, and have vowed never to fly them again. It’s tough for these low fare airlines to break in and make a profit. I have heard good things about Allegiant, and will probably try them sometime in the future. Otherwise, I like to stick with United or Delta. If we had a better long distance train system in the US, that would be a viable alternative. But Amtrak is also struggling, the freight trains have priority and we all have heard the track and equipment maintenance horror stories.
I’ve never cared for Southwest but have flown with them but they are also increasing prices and giving you nothing in return.
I have never flown Spirit or Southwest Airlines. I intend to keep that trend going.
I hope they figure it out- they have killer non-stop flights from PIT to LAS