Spirit Airlines has hit a financial roadblock that resulted in the company filing for Chapter 11 bankruptcy. The announcement follows years of losses, failed mergers, and increasing debt that have left a lasting strain on the airline.
On Monday, Spirit’s President and CEO, Ted Christie, released a statement outlining the airline’s recovery strategy. The company has entered into an agreement with its bondholders to reduce its overall debt. Included in the agreement is a $350 million equity and $300 million in debtor-in-possession (DIP) financing from bondholders. These funds, combined with Spirit’s cash, are expected to sustain the airline through the Chapter 11 process.
“This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience, providing new enhanced travel options, greater value and increased flexibility,” Christie said. “I’m extremely proud of the Spirit team’s hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our guests.”
Additionally, Spirit’s stocks will be canceled and worthless as a part of the restructuring. Despite the filing, Spirit has assured customers that the airline will still operate normally and flights, bookings, and loyalty points will not be affected.
