Spirit Airlines has filed for Chapter 11 bankruptcy protection for the second time in less than 12 months, launching a court-supervised restructuring aimed at overhauling the carrier’s finances, network and fleet strategy.
Parent company Spirit Aviation Holdings, Inc. announced the voluntary petitions on August 29 in the U.S. Bankruptcy Court for the Southern District of New York, saying the move gives the airline “the tools, time and flexibility” to continue discussions with lessors, creditors and other stakeholders while executing “a financial and operational transformation of the company.”
Despite the filing, Spirit said flights, ticket sales, reservations and loyalty redemptions will continue. Employees will remain on payroll and vendors will be paid for goods and services delivered after the filing date.
“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, 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,” said Dave Davis, president and CEO of Spirit Airlines. “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.”
According to Spirit, the restructuring will focus on three areas:
- Redesigning the network to concentrate on key markets and reduce presence elsewhere
- Optimizing the fleet size to better align with profitable demand and lower lease obligations
- Addressing the cost structure by pursuing additional efficiencies and reinforcing its low-cost model
The carrier also said it plans to refine its fare and product mix around its “Spirit First,” “Premium Economy” and “Value” offerings, expanding premium options while staying true to its low-fare positioning.
“As we move forward, guests can continue to rely on Spirit to provide high-value travel options and connect them with the people and places that matter most,” Davis said.
The company expects its shares to be delisted from the NYSE American Stock Exchange and to trade over-the-counter during the proceedings. Spirit noted that common stock “is expected to be cancelled and have no value” once the restructuring is complete.
The company has created a dedicated website for stakeholders to learn about its restructuring process at www.spiritrestructuring.com.
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