Passengers check in at the Spirit Airlines counter at Fort Lauderdale-Hollywood International Airport on February 7, 2022 in Fort Lauderdale, Florida.
Joe Reddell | Getty Images
spirit airlinesThe icon of budget air travel that has reshaped the industry has filed for bankruptcy protection after years of losses. Merge failed and more Strict requirements consumer tastes.
The airline said earlier on Monday it had reached a prearranged deal with bondholders that includes $300 million in debtor-in-possession financing to help it survive the bankruptcy process, with an exit expected in the first quarter of next year. Bankruptcy proceedings. Suppliers, aircraft lessors, will not be harmed, it said.
The airline said it expected to continue normal operations and said customers could continue to book as the busy holiday season approaches.
“The bottom line is that you can continue to book and fly now and in the future,” Spirit CEO Ted Christie said in a letter to customers on Monday. He said customers can use tickets, points and Loyalty points.
Spirit Airlines is the first major U.S. airline to file for Chapter 11 bankruptcy since American Airlines 13 years ago.
The Dania Beach, Florida-based airline has been grappling with engine recall The grounding of dozens of its planes, ballooning post-pandemic costs and the collapse of plans get go through JetBlue AirwaysEarlier this year, a federal judge blocked the plan on antitrust grounds. Its shares have fallen more than 90% this year.
The airline has had multiple delays deadline Renegotiate $1.1 billion in debt due next year with its credit card processors or risk losing the ability to process those transactions.
The company said on Monday it had reached an agreement with bondholders to purchase $350 million of equity and would “complete a deleveraging transaction to balance $795 million of financing debt.”
Spirit filed for protection in the U.S. Bankruptcy Court for the Southern District of New York. The company said it will delist from the New York Stock Exchange following the filing.
Last week, Spirit said it had to postpone its quarterly report and said it was discussing a deal with a majority of shareholders. creditor This would not affect customers, vendors, suppliers and others, but would eliminate existing equity in the company.
Spirit said in the filing that it expects third-quarter profit margins to fall 12 percentage points from a year ago and sales to be $61 million lower than last year, as costs soar and fares fall.
Spirit Airlines and NYSE Arca Airline Index
The airline has not been profitable since 2019, losing more than $335 million in the first half of this year.
To make up the difference, the company sold dozens of planes to replenish cash, which would benefit the company as aircraft are in short supply this year. Most recently, the company sold 23 Airbus aircraft to GA Telesis, generating revenue of $519 million. Spirit said it expects to have about $1 billion in liquidity by the end of the year.
The company also plans to furlough another 330 pilots in January, on top of laying off about 200 pilots in September. cut route. But analysts expect the airline will have to further downsize after the bankruptcy to control costs.
A Spirit Airlines plane parked at New York’s LaGuardia Airport
Leslie Josephs/CNBC
spiritual path
Spirit’s business model of offering the lowest fares and fees on everything from seat assignments to carry-on bags has proven successful among customers looking for bargains, allowing it to expand for more than a decade.
Its simple service has become a favorite punch line for stand-up comedy. greeting card One of the airline’s yellow planes even says, “I’d fly Spirit Airlines for you.”
The low fare and surcharge model has given rise to major airlines such as delta, American and unitedlaunched Basic economy fare.
However, Spirit struggled in the wake of the pandemic, with costs rising across the industry and the lifting of travel restrictions triggering a surge in international travel bookings outside the Spirit network. Fares fell in an oversupplied U.S. market.
Spirit will be available this summer bundled fare Included are seat assignments and other perks, as well as a “first class” cabin that includes larger seats at the front of the plane, as many travelers choose to pay more for roomier seats on board.
In January, a federal judge blocked JetBlue flights US$3.8 billion Plans to acquire Spirit. In early 2022, Spirit Airlines reached a merger agreement with other low-cost airlines border That was before JetBlue made a surprise bid in April of that year. Spirit shareholders back JetBlue Airways’ all-cash takeover bid.
Judge William YoungTrump, who was appointed by former President Ronald Reagan, said the JetBlue deal would drive up fares and reduce competition. Airlines argue this will help them compete better, especially in the United States, where four airlines control about three-quarters of the market.
“Spirit Air is a small airline. But there are people who love it,” Young wrote in his ruling. “For loyal Spirit customers, this is for you.”
Some analysts expect Frontier and Spirit to resume talks in the coming months.
