Spirit Airlines has been gracing the sky with their notorious bright yellow jets since 1983. They are known for their cheap fares, with prices reaching as low as seventy dollars for a round trip flight. They can charge these low prices due to their company structure. Essentially a customer pays only for the 28-inch seat in which they are sitting, any additional add-ons are priced separately. An article from “Forbes” journal notes they nickel and dime customers for virtually everything including checked and carry-on bags, seat selection, on-board beverages, and even to print out your boarding pass (Kelleher, 2024). Following the pandemic, Spirit has faced financial hardships, which has made CEO, Ted Christie, reconsider the structure his company is operating under.
Like many companies, Spirit Airlines suffered significantly from the aftereffects of the Covid-19 pandemic. They began conversations of a merger with Frontier Airlines, another budget carrier, in 2022. An article in the “Wall Street Journal” examines the proceedings as Frontier offered $2.9 billion for the acquisition of the company. Though, soon after JetBlue submitted their offer at $3.8 billion, which won over Spirit’s investors. As the case proceeded to the Justice Department, they blocked the merger stating the best way to promote airline competition would be to leave Spirit alone (Sider, 2024). With the company having lost $2.2 billion since 2020, $335 million being in the first half of 2024 alone, the company is faced with no other choice than to refinance through Chapter 11 Bankruptcy (Sider, 2024).
The “New York Times” recently published an article explaining the proceedings Spirit will be challenged with after filing for bankruptcy early this November. Under Chapter 11’s protection, Spirit will be able to backstop $350 million in debt-to-equity investors, while they financially restructure. Christie is faced with the challenge of cutting current costs and reducing Spirit’s total debt (Kaye, 2024). As the company’s stock price has dropped over 92% since last year, Christie must find a way to race money in other scenarios to keep cash flow high enough to stay in the air. In an article from “PBS News” they explain a course of action, which could raise fairs and cut overhead costs. Spirit passengers have flown two percent more this year compared to last but are paying over ten percent less. Spirit has decided to cut their flying schedules by twenty percent, which will help raise ticket prices and reduce costs of their planes being in the air (Koenig, 2024).
While the company faces an enormous financial battle, a comment from Christie in the “New York Times” stated they expect to exit the bankruptcy process in the first quarter of the 2025 fiscal year (Kaye, 2024). As the remainder of the 2024 year concludes, Spirit Airlines ensures passengers have nothing to worry about as they will continue to fly throughout these proceedings. “Forbes” article states the company is prepared to take on bookings now and in the distant future. Customers can continue to use their current tickets, credits, and loyalty points to reach their destinations (Kelleher, 2024). For now there is no indication operations will be disrupted and customers can continue enjoying their budgeted flights around the world.