Spirit Airlines, known for its budget-friendly yellow planes, is facing financial turmoil as reports surface that the carrier is exploring Chapter 11 bankruptcy protection. The airline, which was profitable and punctual before the pandemic, has seen its fortunes decline as a result of increased competition from larger carriers and a failed acquisition attempt by JetBlue Airways.
The scuttled deal with JetBlue left Spirit to grapple with a Pratt & Whitney engine recall, changing consumer travel patterns, and rising costs. The airline has been losing money since 2020 and has reported disappointing financial results, including a significant loss in the second quarter of this year. In response, Spirit has implemented cost-cutting measures such as furloughing pilots, reducing flights, and deferring jetliner orders from Airbus.
Despite these challenges, Spirit remains hopeful that it can turn its fortunes around. CEO Ted Christie stated in a note to staff that the airline is engaged in discussions with bondholders and is focused on securing the best outcome for the business as quickly as possible. However, a Spirit spokesman declined to comment on reports that the carrier is considering bankruptcy.
As a result of the news, Spirit's stock price plummeted to a record low, dropping more than 24% in a single day. Shares are down nearly 90% so far this year. In contrast, shares of Frontier Airlines, which had originally planned to merge with Spirit before the failed JetBlue deal, surged 16% on Friday. Shares of other airlines also rallied in response to the news.
The future of Spirit Airlines remains uncertain as the carrier grapples with its financial challenges. The airline's ability to renegotiate its debt and implement a successful turnaround plan will be critical in determining its future viability in the highly competitive airline industry.