Why Spirit Airlines filed for bankruptcy, and how it will affect passengers

After struggling with quarterly losses, looming debt payments and failed merger attempts, Spirit Airlines officially filed for bankruptcy on Monday. Despite the bankruptcy, the airline will continue its flight operations.
Since the start of 2020 the airline has lost more than $2.5 billion and has upcoming debt payments in 2025 and 2026 which total more than $1 billion, according to The Associated Press.
The airline’s assets and liabilities are listed as being between $1 billion and $10 billion.
According to CNBC, Spirit’s shares this year have fallen more than 90%.
The airline has faced a long line of struggles in the past few years such as “an engine recall that grounded dozens of its jets, a surge in costs after the pandemic, and the failure of its planned acquisition by JetBlue Airways, which was blocked by a federal judge earlier this year on antitrust grounds,” according to CNBC.
In an effort to get the airline out of bankruptcy, Spirit’s bondholders have committed to $350 million in debtor-in-possession financing, the airline also plans to convert $795 million of the debt into stock, per The AP.
Spirit will also receive a $300 million-dollar loan from its bondholders, to combine with the airline’s remaining cash in order to help it get through restructuring.
The airline says it plans to exit bankruptcy in the the first quarter of next year, per CNBC.
According to CNBC, the airline says the bankruptcy will not impair its vendors and aircraft lessors.
Spirit does not own all of its planes, some of its fleet is leased.
The lessor will retain possession of the leased aircraft and they are free to release to Spirit or other airlines, per USA Today.
The planes that Spirit does own could be sold to raise money during the bankruptcy but they can also choose to sell other assets such as gates or airport slots.
According to USA Today, there is no reason for passengers to worry about their flights yet, the carrier expects to continue its flights throughout its bankruptcy proceedings.
Passengers are still able to book, fly and even use loyalty points without interruption.
It is expected that Spirit’s flights will continue to operate as scheduled and it is unlikely that Thanksgiving travel will be affected.
It is possible that later in the winter there will be schedule changes and cancellations, per USA Today.
Spirit Airlines does fly out of Salt Lake International Airport but not out of the Provo Airport.
The first Spirit Airlines flights out of Salt Lake City started in 2022, according to Simple Flying.
Now, there are Spirit Airline flights from Salt Lake to a variety of U.S. locations such as Las Vegas, Nevada; Los Angeles, California, and Dallas, Texas.
Over the summer, Spirit Airlines added daily flights out of Salt Lake City to both San Diego, California, and Fort Lauderdale, Florida.