Spirit files for bankruptcy: what passengers need to know

While Spirit Airlines filed for Chapter 11 bankruptcy protection, the airline stated that passengers would still be able to travel as usual. But industry experts warn that airlines’ financial problems have already affected their operations and will continue to do so.

In an open letter to travelers on Monday, the budget airline said it has entered into an agreement with bondholders to reduce its overall debt, provide greater financial flexibility and position it “for long-term success”.

The company expects to complete the bankruptcy proceedings in the first three months of 2025. During this process, the budget carrier said it expects to “continue its operations as normal.”

SPIRIT AIRLINES FILES FOR CHAPTER 11 BANKRUPTCY PROTECTION

Here’s what the airlines told travelers:

In its statement Monday, Spirit said guests can still book and fly “without interruption.” This means that travelers can still use all their tickets, credits and loyalty points, according to the airline. The carrier also said customers can still take advantage of the company’s Free Spirit loyalty program, Saver$ Club benefits and credit card terms.

The company also hinted that this process will not hinder leisure travel either.

“We are grateful that you continue to choose Spirit for your travel needs. As we enter the holiday season and beyond, we look forward to welcoming you back on board soon,” the company said.

Travelers check in at the Spirit Airlines counter at Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida, on October 24, 2023. (Eva Marie Uzcategui/Bloomberg via Getty Images/Getty Images)

Points Guy founder Brian Kelly said filing for bankruptcy does not mean the company is “closing its doors,” a message he said Spirit is trying to convey to its customers.

“They need consumers to have confidence in the airline,” Kelly told FOX Business. “They are already struggling, so if people start booking with other airlines it will mean even more problems for the airline. And they clearly want to survive this process.”

JETBLUE, SPIRIT AGREE TO TERMINATE MERGER OVER REGULATORY ISSUES

Despite the reassurance from the airlines, Kelly believes travelers will inevitably feel the impact.

He pointed to the fact that Spirit has already cut back on several routes, announced plans to lay off pilots and sell planes.

Spirit Airlines expects to complete the bankruptcy proceedings in the first three months of 2025. (iStock / iStock)

In a Securities and Exchange Commission filing last month, the ultra-low-cost airline said it had identified about $80 million in annualized cost savings that it plans to implement next year.

This won’t necessarily impact leisure travel, but could impact future travel plans through 2025, Kelly said.

“What that means for the traveler is that if you book with Spirit far from home, there’s a good chance your flight time will be drastically changed or your flight will be canceled altogether,” he said.

Because of the Ministry of Transport‘S Thanks to the recently introduced automatic refund rule, which defines the circumstances under which airlines must issue refunds, passengers are entitled to compensation in the event of cancellations, Kelly said.

But he warned that the disruption could still cause significant headaches, “especially if the cancellation occurs closer to departure when all alternative options are much more expensive.”

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Kelly said Spirit’s survival is critical to the health of the travel ecosystem.

“Whether you love Spirit or hate Spirit, they are good for the travel ecosystem and for keeping fares relatively low today,” Kelly said, adding that fares today, adjusted for inflation, are actually cheaper than in 2019.

“It’s because of carriers like Spirit,” he said.