Budget air carrier Spirit Airlines filed for Chapter 11 relief last week as part of a “comprehensive restructuring,” according to a statement posted on the airline’s website. The move comes less than a year after the airline’s last bankruptcy filing.
“Spirit is redesigning its network to focus its flying on key markets to provide more destinations, frequencies, and enhanced connectivity in certain of its focus cities, while simultaneously reducing its presence in certain other cities,” Chief Financial Officer and Executive Vice President Fred Cromer said in a declaration filed in U.S. Bankruptcy Court Sunday. “In line with the redesigned network, Spirit intends to rightsize its fleet to match capacity with profitable demand. Doing so will significantly shrink Spirit’s overall fleet, which in turn will materially lower Spirit’s debt and lease obligations, leading to hundreds of millions of dollars in annual operating savings.”
The airline currently has routes connecting St. Thomas to Orlando and Fort Lauderdale, the latter of which also has flights to and from St. Croix. During the restructuring, Spirit said flights will operate normally and flyers can use tickets, credits and loyalty points.
Spirit previously filed for bankruptcy in November 2024 amid “large upcoming debt maturities and external macroeconomic pressures,” Cromer wrote, and the airline ultimately reached a deal with bondholders to equitize approximately $800 million in debt and inject $350 million in cash through an equity rights offering.
“Unfortunately, the industrywide headwinds that preceded the Prior Chapter 11 Cases did not abate; rather, they intensified,” he wrote. “In the post-COVID industry environment, the domestic airline industry, and particularly its low-cost/value sector, has suffered from a combination of material excess capacity and slack passenger demand, particularly from the more price-sensitive leisure travelers who are the core customers of low-cost/value carriers.”
In a quarterly report to the U.S. Securities and Exchange Commission filed this month, Spirit said its plans to improve liquidity could include selling aircraft, real estate and excess airport gate capacity.
“However, there can be no assurance that we will be able to improve our liquidity position, achieve our business plans or return to profitability,” according to the filing from Spirit Aviation Holdings. “Further, we can give no assurances that we will be able to secure additional sources of funds to support our operations or refinance our existing indebtedness, or, even if such additional funds are available to us, that such additional financing will be on terms that are acceptable to us or sufficient to meet our needs.”
The airline cautioned that its business, financial condition and operations “will be materially and adversely affected” if it’s unable to raise capital or refinance its debt.
In a statement last week, Spirit Chief Executive Dave Davis said that since the airline’s last Chapter 11 petition, “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.”
“After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our board of directors decided that a court-supervised process is the best path forward to make the changes needed to ensure long-term success.”
