A passenger waits for assistance on the Spirit Airlines check-in counter within the Austin-Bergstrom International Airport on November 13, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Spirit Airlines has filed for Chapter 11 bankruptcy protection, becoming the primary major U.S. passenger carrier to accomplish that since American Airlines 13 years ago.
The budget travel icon is just not shutting down, nonetheless. The filing will buy Spirit time and protection to restructure so the carrier can proceed flying and bringing in sorely needed money.
CEO Ted Christie wrote to customers on Monday to reassure them that they will proceed to book flights and use loyalty points or credits normally.
Here’s what travelers have to know:
Why did Spirit file for bankruptcy?
Spirit Airlines has been losing money since 2019, but its financial woes worsened after the pandemic, when industry costs climbed, dozens of its Airbus jets were grounded due to an engine recall and a federal judge blocked Spirit’s planned acquisition by JetBlue Airways.
The airline had struggled to renegotiate its $1.1 billion in debt payments due next 12 months. A deadline at the top of the 12 months tied to its bank card processing agreement was fast approaching.
Spirit said Monday that it has reached a prearranged take care of nearly all of its bondholders for a “streamlined” Chapter 11 bankruptcy protection plan. It expects to exit that process in the primary quarter of 2025.
Is my flight still happening?
Filing for Chapter 11 bankruptcy protection does not imply the airline will stop operations. Fairly, it gives the airline protection to reorganize its business, which regularly means shedding assets or parts of its operation.
“From a consumer standpoint, you will need to concentrate if Spirit makes any schedule changes or if they’ll do away with any aircraft, lay off any pilots and flight attendants — that may affect the traveling public,” said Henry Harteveldt, founding father of travel consulting firm Atmosphere Research Group.
The carrier is prone to keep as much of its schedule as possible in place for the vacation season, when airlines generate loads of revenue in the course of the popular travel period, but additional cuts are likely not far behind.
What am I entitled to if Spirit cancels my flight?
Under U.S. rules, airline customers are entitled to a money refund if the airline cancels their flight and they are not rebooked. Spirit Airlines said Monday that it plans to proceed flying and CEO Ted Christie tried to reassure customers, whose bookings will herald needed money in the course of the peak holiday season.
Nevertheless, the Department of Transportation warns that bankruptcy protection could make getting a refund harder.
“If the airline or ticket agent has filed for bankruptcy, the corporate could also be temporarily prohibited from providing refunds and/or vouchers — for instance, to conserve assets,” in accordance with its website.
The agency says that if an airline that has filed for bankruptcy protection refuses to refund you for a canceled or significantly modified flight, your bank card could provide one under the Fair Credit Billing Act.
Even for those who get a refund, nonetheless, buying a ticket last minute to interchange your original flight may very well be costly as a result of high demand and scarce seats. Harteveldt recommends all the time buying airline tickets with a bank card, which affords customers more cancellation protections than debit cards or money. Travelers may book a refundable ticket on one other carrier in the event that they are anxious, though that could be very costly, too.
Travel insurance might also cover pre-paid expenses if bankruptcy alters airline flights.
What happens next?
This stays to be seen. Spirit expects to exit Chapter 11 bankruptcy protection in the primary quarter of next 12 months. Airlines can emerge from this process as smaller, more cost-efficient carriers. Other airlines, short on airplanes, could scoop up a few of Spirit’s assets.
Spirit had a deal to merge with fellow discounter Frontier before JetBlue swooped in with a rival bid. Frontier and Spirit could attempt a mix again, especially since some industry members think the incoming Trump administration shall be relatively friendly toward deal-making.
