Spirit Airlines moved forward with preparations to file for Chapter 11 bankruptcy protection after last-ditch merger discussions with Frontier Airlines collapsed on November 13, 2024. The restructuring timeline was accelerated. Spirit’s common stock plunged by more than 60% in intraday trading on the New York Stock Exchange, reducing its market capitalization to approximately $120 million. The Florida-based discount airline is engaged in advanced negotiations with a steering committee of senior secured bondholders to structure a prearranged restructuring support agreement.
Spirit accumulated more than $2.5 billion in net losses since 2019, weighed down by overcapacity and discount fare competition from legacy carriers. In late 2023, Pratt & Whitney discovered contaminated powdered metal in Geared Turbofan engines, necessitating inspections. Engine recalls forced Spirit to ground dozens of Airbus A320neo family jets, stripping revenue-generating capacity while fixed leasing costs accrued. In January 2024, U.S. District Judge William G. Young in Boston blocked the proposed JetBlue merger on antitrust grounds, ruling removing Spirit’s ultra-low-cost model would harm cost-conscious travelers. JetBlue terminated merger agreement in March 2024, leaving Spirit to confront debt maturities without external capital backing.
Spirit Airlines noted in a regulatory filing that it was in active discussions with bondholders regarding a comprehensive balance sheet restructuring to address impending debt maturities and ensure ongoing business operations under Chapter 11 protection. The proposed Chapter 11 restructuring aims to execute a debt-for-equity swap across roughly $1.1 billion in senior secured notes maturing in 2025 and 2026. Spirit is negotiating with major noteholders to secure hundreds of millions of dollars in debtor-in-possession (DIP) financing to support ongoing working capital. Customers will remain able to book flights, redeem Free Spirit loyalty program points, and utilize travel vouchers without operational impairment during court-supervised proceedings.
