Spirit Airlines files for bankruptcy as financial losses pile up and debt payments loom
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Spirit Airlines said Monday that it has filed for bankruptcy protection and will attempt to reboot as it struggles to recover from the pandemic-caused swoon in travel and a failed attempt to sell the airline to JetBlue.
Spirit Airlines said Monday that it has filed for bankruptcy protection and will attempt to reboot as it struggles to recover from the pandemic-caused swoon in travel and a failed attempt to sell the airline to JetBlue.
Spirit, the biggest U.S. budget airline, has lost more than US$2.5 billion since the start of 2020 and faces looming debt payments totalling more than $1 billion over the next year.
Spirit said it expects to operate as normal as it works its way through a prearranged Chapter 11 bankruptcy process and that customers can continue to book and fly without interruption.
Shares of Miramar, Florida-based Spirit dropped 25 per cent on Friday, after The Wall Street Journal reported that the airline was discussing terms of a possible bankruptcy filing with its bondholders. It was just the latest in a series of blows that have sent the stock crashing down by 97 per cent since late 2018 -- when Spirit was still making money.
CEO Ted Christie confirmed in August that Spirit was talking to advisers of its bondholders about the upcoming debt maturities. He called the discussions a priority, and said the airline was trying to get the best deal it could as quickly as possible.
"The chatter in the market about Spirit is notable, but we are not distracted," he told investors during an earnings call. "We are focused on refinancing our debt, improving our overall liquidity position, deploying our new reimagined product into the market, and growing our loyalty programs."
People are still flying on Spirit Airlines. They're just not paying as much.
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