Spirit Airlines files for bankruptcy amid financial woes

Spirit Airlines filed a Chapter 11 bankruptcy petition after working out terms with bondholders. The U.S. budget airline has lost more than $2.5 billion since the start of 2020.

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, stiffer competition from bigger carriers, and a failed attempt to sell the airline to JetBlue.

Spirit, the biggest U.S. budget airline, filed a Chapter 11 bankruptcy petition after working out terms with bondholders. The airline has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion in 2025 and 2026.

The airline said it expects to continue operating normally during the bankruptcy process. Spirit told customers Monday that they can book flights and use frequent-flyer points as they ordinarily would, and it said it will continue to pay employees and vendors.

The airline said it received commitments for a $350 million equity investment from existing bondholders and will convert $795 million of their debt into stock in the restructured company. The bondholders will also extend a $300 million loan that, combined with Spirit’s remaining cash, will help the airline get through the restructuring.

Shares of Miramar, Florida-based Spirit dropped 25% on Friday, after The Wall Street Journal reported that the airline was discussing terms of a possible bankruptcy filing with its bondholders. The company missed a deadline for filing its third-quarter financial results, but announced that its operating margin would indicate a bigger loss than the company suffered in the same quarter last year.

Those were just the latest in a series of blows that have sent the stock crashing down by 97% 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.

People are still flying on Spirit Airlines. They’re just not paying as much.