Spirit Airlines exits bankruptcy protection as travel demand slows

NEW YORK (AP) — Discount carrier Spirit Airlines has emerged from bankruptcy protection.

The budget airline — known for its no-frills, low-cost flights on a fleet of yellow planes — said Wednesday that its parent, Spirit Aviation Holdings, exited Chapter 11 after finalizing debt restructuring. The reorganization plan, which received the court greenlight last month, aims to bring the carrier back to profitability and boost resources to compete with rivals.

“We’re emerging as a stronger and more focused airline,” CEO Ted Christie, who will continue to lead Spirit post-bankruptcy, said in a statement.

The restructuring deal allows Spirit to convert $795 million of its debt into equity. The company says it’s also received a $350 million equity investment from existing investors to aid future operations.

Spirit filed for bankruptcy back in November, following years of struggles and mounting debt as it failed to bounce back from the COVID-19 pandemic. The Florida carrier was particularly hit hard by rising operating expenses and stiffer competition. By the time of its Chapter 11 filing, the airline had lost more than $2.5 billion since the start of 2020.

Whether Spirit will continue as a standalone airline has also been up in the air, although takeover attempts from budget rivals like JetBlue and Frontier have proven to be unsuccessful before and during the bankruptcy process. Spirit rejected a third bid from Frontier last month.

While future merger proposals may not be entirely off the table, Spirit signaled Wednesday that it would continue to focus its own growth and offerings. Christie noted that the airline would be “moving forward with our strategy to redefine low-fare travel with our new, high-value travel options.”

In an evolution from its budget-exclusive roots, Spirit is attempting to tap into the growing market for more upscale travel. It is now offering flight options with tiered prices, the higher-priced tickets coming with more amenities. Last year, months before filing for Chapter 11, Spirit decided to sell bundled fares that include a bigger seat, priority boarding, free bags, internet service and snacks and drinks.

In a message sent to Spirit customers Wednesday, Christie continued to point those four travel options from the airline, which he said “let you choose how you want to fly.”

Wednesday’s announcement also noted plans to trade shares publicly again, although not immediately. Shares of Spirit previously issued by Spirit Airlines Inc. was canceled upon its exit from bankruptcy — but it expects to re-list shares, newly-issued under new owners, “as soon as reasonably practicable.”

Meanwhile — between wider economic turmoil, high-profile plane crashes and other consumer uncertainty — major airlines have issued warnings in recent days about falling demand. Carriers like Delta, Southwest, American have all recently downgraded revenue outlooks for the first quarter.