Dmcrea
  • Home
  • Crypto
  • Economic
  • Entrepreneurship
  • Finance
No Result
View All Result
  • Home
  • Crypto
  • Economic
  • Entrepreneurship
  • Finance
HealthNews
No Result
View All Result
Home Finance

Spirit Airlines Bankruptcy: How Customers Will Be Affected

DMcrea by DMcrea
November 19, 2024
in Finance
0
Spirit Airlines Bankruptcy: How Customers Will Be Affected
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

Spirit Airlines, known for being one of the cheapest carriers in the U.S., announced Monday morning that it’s filing for bankruptcy as it struggles to overcome challenges like increased competition on its leisure routes and higher labor costs.

Whether you have an upcoming Spirit flight, a balance of Spirit miles in your account or ownership of the airline’s stock, you likely have some questions about what this all means — not just for the airline, but for you.

Take a deep breath. Airline bankruptcies are actually relatively common, and they typically don’t lead to immediate flight cancellations. But customers — and investors — will still likely be affected by this bankruptcy process in several ways.

Here’s what we know right now:

Ads by Money. We may be compensated if you click this ad.Ad

What does bankruptcy mean?

Companies like Spirit elect to file for Chapter 11 bankruptcy protection in dire financial circumstances in order to restructure debts and reorganize the business.

Unlike Chapter 7 bankruptcy, in which a company ceases operations and its assets are liquidated, chapter 11 protection can allow the business to keep operating.

What will happen to Spirit Airlines now?

Spirit said in a news release that it hopes to continue flying during bankruptcy and emerge in a stronger financial position as a result of the process.

Spirit had been operating with about $3.6 billion of long-term debt, the airline said in a court filing Monday. The company said the restructuring moves should reduce its debt by $795 million, with creditors swapping debt in exchange for equity.

Spirit said it’s raising $350 million through an equity rights investment, and bondholders are providing $300 million of financing that will support the company in the bankruptcy process.

Are my Spirit flights canceled?

In its statement, Spirit Airlines said it “expects to continue operating its business in the normal course throughout this prearranged, streamlined Chapter 11 process.” That means existing Spirit tickets are valid, and customers can continue booking new tickets, the airline said.

Spirit also noted that “other airlines that are operating successfully today have undertaken a similar process.” However, in the past, other airlines have taken significant steps to cut costs during the bankruptcy process, including trimming flight schedules and reducing fleet sizes.

Spirit already planned to reduce its flight schedule by 20% this quarter compared to the prior year.

While near-term disruptions to existing bookings may be unlikely, customers with plans to fly Spirit Airlines should monitor their itineraries for any unexpected changes.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer

What happens to my Free Spirit points?

Spirit Airlines said customers will be able to use their credits and loyalty points “as normal.”

The airline’s frequent flyer program is called the Free Spirit loyalty program. General customers earn six points for every dollar spent; these points can then be used to book flights.

In the past when U.S. airlines have filed for bankruptcy, frequent flyer miles have usually been honored. If the airline were to be liquidated, however, it could be a different story.

In 2022, JetBlue arranged to acquire and merge with Spirit, but federal antitrust regulators intervened to block the plan earlier this year. While there are no indications of plans for a merger at this time, it’s notable that the incoming Trump administration is expected to be more friendly toward mergers.

What’s next for Spirit stock after the bankruptcy?

According to the New York Stock Exchange, trading on Spirit Airlines stock was halted Monday morning due to regulatory concern. The airline, which went public in 2011, said in its statement that it “expects to be delisted from the New York Stock Exchange in the near term.”

As of Monday, the company’s stock price was down over 93% this year. Its stock will trade in the over-the-counter market, and the shares will ultimately be canceled, Spirit said.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer

Has this ever happened before?

Yes, many U.S. airlines have filed for Chapter 11 bankruptcy protection in recent decades. A number of major airlines still in operation filed for bankruptcy and made it to the other side, including:

  • American Airlines (filed in 2011)
  • Frontier Airlines (2008)
  • Delta Air Lines (2005)
  • United Airlines (2002)

JetBlue and Southwest Airlines are the only large American airlines that haven’t yet gone through bankruptcy.

In other cases when airlines have filed for bankruptcy, they’ve ceased operations and had all their assets sold. Examples include Pan American Airways, which filed for bankruptcy in 1991, and Trans World Airlines, which ceased operations in 2001.

More from Money:

14 Best Travel Credit Cards

Airlines Now Have to Automatically Refund You in These 5 Situations

You Can Now Renew Your Passport Online (but It Still Costs $130)

Previous Post

Authorities Bust $232M Crypto Scam in South Korea, Arrest 215 Suspects

Next Post

The Influence of Political Systems on Inflation and Monetary Policy

DMcrea

DMcrea

Next Post
The Influence of Political Systems on Inflation and Monetary Policy

The Influence of Political Systems on Inflation and Monetary Policy

Recommended

AI the Revolutionary New Factor of Production

AI the Revolutionary New Factor of Production

7 months ago
Dogecoin Pressing Range Highs – Can Bulls Push DOGE To ATH?

Dogecoin Pressing Range Highs – Can Bulls Push DOGE To ATH?

5 months ago

Don't Miss

COLA Estimate for 2026 Signals Modest Social Security Bump

COLA Estimate for 2026 Signals Modest Social Security Bump

May 15, 2025
Bitcoin Metrics Align for Extended Bull Run as Price Holds Above Six Figures: Analysts

Bitcoin Metrics Align for Extended Bull Run as Price Holds Above Six Figures: Analysts

May 15, 2025
Glow in the Dark Flowers!

Glow in the Dark Flowers!

May 15, 2025
Ticketmaster, StubHub Must Show Full Prices Under New Rule

Ticketmaster, StubHub Must Show Full Prices Under New Rule

May 14, 2025
  • Home
  • Crypto
  • Economic
  • Entrepreneurship
  • Finance

© 2024 Dmcrea.com

No Result
View All Result
  • Home
  • Crypto
  • Economic
  • Entrepreneurship
  • Finance

© 2024 Dmcrea.com