By Shivansh Tiwary
(Reuters) -U.S. no-frills pioneer Spirit Airlines filed for fresh Chapter 11 bankruptcy protection on Friday, as dwindling cash and mounting losses derailed its turnaround efforts since emerging from a previous reorganization in March.
The carrier, recognizable by its bright yellow jets, has struggled to steady operations since emerging from its first bankruptcy in March.
Flights, ticket sales, reservations and operations will continue, the airline said on Friday.
The company said it was working productively with its secured noteholders, including with respect to potential financing that may become necessary later in the proceedings.
Spirit had been attempting to rebrand as a more premium airline to keep pace with post-pandemic travel trends that have challenged the viability of the ultra-low-cost model.
But Spirit’s recovery was further hit by uncertainty from President Donald Trump’s tariffs and budget cuts, which have cooled consumer spending and driven down domestic airfares.
The airline was forced to raise going-concern doubts earlier this month.
“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 CEO Dave Davis.
The Florida-based airline first sought bankruptcy protection last November after years of losses, failed merger bids and mounting debt, becoming the first major U.S. carrier to do so since 2011.
Its troubles compounded by the collapse of a $3.8 billion merger with JetBlue Airways and RTX’s Pratt & Whitney engine issues that forced it to ground many of its Airbus jets.
After emerging from bankruptcy in March, Spirit relisted its shares on the NYSE American exchange to bolster investor confidence in its turnaround plan, but the stock had been sliding ever since.
On Friday, it said it expects its common stock to be delisted from the exchange. They fell 44% in extended trading.
As part of its turnaround strategy, the company shifted its focus from price-conscious flyers to more affluent travelers, a move it estimated would boost revenue per passenger by 13%.
It was planning to redesign its loyalty program and enter into alliances with other carriers.
Spirit’s struggles have opened the door for rivals, with Frontier Airlines adding routes and eyeing further expansion.
Spirit began in 1964 as a long-haul trucking company before shifting to aviation in the 1980s, initially flying leisure packages under the name Charter One Airlines.
It rebranded as Spirit in 1992 and built its reputation as a discount carrier for budget-conscious travelers willing to skip extras like checked bags and seat assignments.
But the pandemic upended that model, as demand shifted toward more comfortable, experience-driven travel, leaving ultra-low-cost carriers struggling to adapt.
In its previous restructuring, the airline had reduced its debt by about $795 million by converting it into equity. It had also received $350 million in equity investment from existing investors.
(Reporting by Shivansh Tiwary in Bengaluru, Additional reporting by Doyinsola Oladipo; Editing by Sriraj Kalluvila and Maju Samuel)
Comments