After struggling with quarterly losses, failed mergers, and looming debt, Spirit Airlines has filed for Chapter 11 bankruptcy protection. Despite strong travel demand, the airline faced higher operating costs, exacerbated by:
1. Collapse of $3.8B JetBlue merger
2. Engine issues grounding aircraft
3. Surging labor and maintenance costs
Key Details:
– Estimated assets and liabilities: $1-10B each
– $350M equity investment from bondholders
– $300M debtor-in-possession financing
– Expected to continue flight operations without interruption
– Delisting from NYSE imminent
– Aims to emerge from bankruptcy by Q1 2025
Challenges:
– Higher costs due to labor contracts and maintenance
– Shift in consumer preferences towards comfort over budget travel
– Questions over the viability of ultra-low-cost carrier business model