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Spirit Airlines Files for Bank...

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Spirit Airlines Files for Bankruptcy amid Mounting Losses and Stiff Competition

Spirit Airlines Files for Bankruptcy amid Mounting Losses and Stiff Competition
The Silicon Review
19 November, 2024

While Spirit remains optimistic about restructuring, the possibility of liquidation or acquisition looms.

Spirit Airlines filed for Chapter 11 bankruptcy protection on Monday, citing mounting financial losses, unsustainable debt levels, and fierce competition in the low-cost airline market. Despite the setback, the company assured passengers it would continue operations while restructuring its debt. Spirit's statement outlined plans to emerge from bankruptcy by early 2025 with reduced debt and greater financial flexibility, positioning the airline for long-term success. As part of its recovery strategy, creditors have committed an additional $300 million to fund operations during the bankruptcy process. The filing disclosed Spirit's extensive workforce, including nearly 13,000 full-time and part-time employees, as well as 8,000 independent contractors and temporary staff. The U.S. Treasury Department, listed as Spirit's second-largest creditor, is owed $136 million on an unsecured loan issued during the pandemic. This loan was part of a $21.2 billion federal program to stabilize the airline industry when travel demand plummeted.

While Spirit remains optimistic about restructuring, the possibility of liquidation or acquisition looms. Several U.S. airlines, including American Airlines, have historically used bankruptcy to facilitate mergers or sell assets. Spirit’s financial struggles come amid a challenging landscape for budget airlines, which face heightened competition for cost-conscious travelers. If successful, Spirit hopes to use the bankruptcy process to strengthen its position and enhance its offerings for passengers.

The filing underscores the resilience of the U.S. aviation industry, as many major airlines have previously emerged stronger from bankruptcy over the last 25 years.

 

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