Core Insights - Spirit Airlines filed for Chapter 11 bankruptcy protection in November, marking a significant downturn for the airline which has not been profitable since 2019 and has incurred losses exceeding $2 billion since 2020 [1][3] Industry Challenges - The airline industry has been severely impacted by the Covid-19 pandemic, which was compounded by supply chain issues and rising operational costs, including increased wages for employees [1] - Changes in traveler preferences post-pandemic have led to increased competition, as consumers are now willing to pay for more comfort and amenities, prompting legacy carriers to introduce basic economy fares and segmented cabins [2] Company Actions - In response to financial difficulties, Spirit Airlines furloughed hundreds of pilots, offered buyouts to salaried workers, sold parts of its Airbus fleet, and cut routes [3] - The airline plans to continue operations during the bankruptcy process, with expectations to emerge as a smaller entity with fewer routes by the first quarter of 2025 [3]

Business Strategy and Operations - Spirit Airlines launched a no change or cancel fee policy in May 2024, allowing guests to only pay the fare difference or receive a credit for cheaper trips [170]. - The company introduced four new travel options: Go Big, Go Comfy, Go Savvy, and Go, enhancing customer experience with features like priority boarding and increased baggage allowances [171][172]. - Spirit's business model focuses on value-conscious travelers, providing affordable travel options while maintaining a commitment to customer experience [168]. - The new boarding process aims to reduce boarding time and enhance operational performance, with priority boarding for select customers [174]. Financial Performance - For Q3 2024, the company reported a pre-tax loss of $338.0 million and a net loss of $308.2 million on operating revenues of $1,197.1 million, compared to a pre-tax loss of $203.6 million and a net loss of $157.6 million on revenues of $1,258.5 million in Q3 2023 [195]. - Operating revenues decreased by $61.4 million, or 4.9%, primarily due to a 5.1% decrease in average yield, partially offset by a 0.2% increase in traffic year over year [207]. - Operating revenues decreased by $297.3 million, or 7.4%, to $3,743.5 million for the nine months ended September 30, 2024, primarily due to an 8.6% decrease in average yield, partially offset by a 1.4% increase in traffic year over year [229]. - Total revenue per passenger flight segment decreased by 10.0% year over year, driven by a 5.1% decrease in average yield [209]. - Total revenue per passenger flight segment decreased by 11.3% year over year, driven by an 8.6% decrease in average yield, including the impact of no longer charging for change and cancellation fees [230]. Bankruptcy and Restructuring - On November 18, 2024, Spirit commenced a voluntary Chapter 11 bankruptcy case, with plans to restructure its capital structure [175][177]. - The Restructuring Support Agreement includes equitization of $410 million in Senior Secured Notes and $385 million in convertible notes, along with a $350 million new money equity raise [179]. - Spirit secured a $300 million debtor-in-possession financing facility to support operations during the bankruptcy process [185]. - The company plans to issue $840 million in senior secured notes due 2030, with an interest rate of 12% per annum, as part of its restructuring plan [180]. - Spirit's stock began trading on the OTC Pink Market under the symbol "SAVEQ" on November 19, 2024, following its Chapter 11 filing [168]. Operating Expenses - Operating expenses increased by $46.2 million to $1,493.5 million in Q3 2024, primarily due to higher aircraft rent, salaries, and other operating expenses [210]. - Total operating expenses for Q3 2024 were $1,493.5 million, an increase of $46.2 million, or 3.2%, compared to Q3 2023 [215]. - Salaries, wages, and benefits increased by $22.9 million, or 5.7%, in Q3 2024 compared to Q3 2023, primarily due to higher salary and health benefits expenses [216]. - Landing fees and other rents rose by $22.5 million, or 20.9%, in Q3 2024 compared to Q3 2023, attributed to increased landing fees and facility rent [217]. - Aircraft rent expense increased by $51.1 million, or 52.5%, in Q3 2024 compared to Q3 2023, due to the acquisition of 28 new aircraft financed under operating leases [219]. Fuel and Maintenance Costs - The average economic fuel cost per gallon decreased by 15.8% to $2.61 in Q3 2024 from $3.10 in Q3 2023 [192]. - Aircraft fuel expense decreased by $81.8 million, or 18.0%, from $455.2 million in Q3 2023 to $373.4 million in Q3 2024, driven by a 15.8% decrease in average economic fuel cost per gallon and a 2.7% decrease in fuel gallons consumed [212][213]. - Amortization of heavy maintenance costs increased to $33.4 million in Q3 2024 from $23.4 million in Q3 2023, driven by the timing and number of maintenance events [221]. - Amortization of heavy maintenance costs increased to $90.8 million for the nine months ended September 30, 2024, up from $59.7 million in the prior year, reflecting the timing and number of maintenance events [240]. Liquidity and Cash Flow - As of September 30, 2024, the company had $840.7 million in liquidity, consisting of unrestricted cash, cash equivalents, short-term investments, and available funds under its revolving credit facility [254]. - Cash used in operating activities for the nine months ended September 30, 2024, was $634.3 million, compared to $63.9 million used in the same period of 2023 [265]. - Investing activities provided $406.0 million during the nine months ended September 30, 2024, compared to $185.5 million used in the prior year period [266]. - Financing activities used $162.7 million in cash during the nine months ended September 30, 2024, a decrease from $278.6 million used in the same period of 2023 [267]. Future Commitments and Obligations - The company has 56 A320 family aircraft on order with Airbus, with deliveries expected through 2031, including 1 aircraft scheduled for delivery in 2024 [268]. - As of September 30, 2024, aircraft rent commitments for future deliveries are expected to be approximately $1.8 million for the remainder of 2024, $33.8 million in 2025, $40.5 million in 2026, $101.7 million in 2027, $196.6 million in 2028, and $2,538.6 million in 2029 and beyond [275]. - Total future payments on contractual obligations as of September 30, 2024, amount to $15,255 million, including long-term debt, lease obligations, and flight equipment purchase obligations [280]. - The company had secured 41 direct leases for aircraft with third-party lessors, with deliveries scheduled from 2024 through 2028 [275]. Tax and Interest - The effective tax rate for Q3 2024 was 8.8%, a decrease from 22.6% in Q3 2023, primarily due to changes in valuation allowances on deferred tax assets [228]. - The effective tax rate for the nine months ended September 30, 2024, was 6.0%, down from 20.1% in the prior year, primarily due to an adjustment in tax expense [249]. - Interest income for Q3 2024 was $11.3 million, down from $18.4 million in Q3 2023, reflecting changes in cash and investment income [227]. - For the nine months ended September 30, 2024, the company reported interest income of $37.1 million, a decrease of 25.6% from $49.8 million in the same period of 2023 [247].

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Core Viewpoint - Spirit Airlines has filed for bankruptcy protection and reached a debt restructuring agreement with bondholders, while its shares have dropped over 90% this year [1][2][3]. Group 1: Bankruptcy Filing and Debt Restructuring - Spirit Airlines filed for Chapter 11 bankruptcy protection and has an agreement with bondholders to restructure its debt [2][4]. - The restructuring is expected to reduce total debt and provide increased financial flexibility, positioning the airline for long-term success [4]. - The airline will continue normal flight operations during the bankruptcy process [4]. Group 2: Financial Commitments and Support - Existing bondholders have committed to a $350 million equity investment and will equitize $795 million of funded debt [5]. - Spirit will receive $300 million in debtor-in-possession financing from bondholders, along with existing cash reserves, to support operations during bankruptcy [5]. Group 3: Operational Challenges and Previous Attempts - Spirit Airlines has faced challenges, including job cuts and selling planes to improve finances, and failed merger attempts with JetBlue Airways and Frontier Airlines [6]. - The airline's shares have seen a 3.7% increase in premarket trading but remain down over 90% year-to-date [3].

Core Viewpoint - Spirit Airlines has filed for bankruptcy protection as it attempts to recover from significant financial losses and a failed merger attempt with JetBlue, while continuing to operate normally during the Chapter 11 process [1][3]. Financial Performance - Since the start of 2020, Spirit Airlines has incurred losses exceeding $2.5 billion and faces over $1 billion in debt payments due within the next year [1][4]. - In the first half of this year, Spirit's passenger numbers increased by 2% compared to the same period last year, but revenue per mile from fares decreased by nearly 20%, indicating a decline in profitability [5][6]. Market Position and Strategy - The airline's traditional low-cost model has been challenged by rising labor costs and competition from larger airlines offering similar budget options [5][6]. - Spirit has shifted its strategy to include bundled fares that offer additional services, a departure from its previous model of low base fares with extra charges for services [7][8]. Operational Adjustments - Spirit plans to reduce its flight schedule by nearly 20% from October to December compared to the previous year, a move analysts suggest may benefit competitors more than Spirit itself [8]. - The airline has faced operational challenges due to required repairs on Pratt & Whitney engines, leading to the grounding of several Airbus jets and subsequent pilot furloughs [12]. Competitive Landscape - Analysts predict that competitors such as Frontier, JetBlue, and Southwest will benefit from Spirit's struggles, particularly due to route overlaps [12]. - The failed merger attempts with JetBlue and Frontier highlight the competitive pressures within the airline industry, with regulatory challenges impacting consolidation efforts [15].

Core Viewpoint - Spirit Airlines has filed for Chapter 11 bankruptcy protection due to significant financial struggles, including mounting losses and debt maturities, following two failed mergers in less than two years [1] Financial Situation - The airline has experienced repetitive quarterly losses, leading to the bankruptcy filing [1] - In October, Spirit announced plans to sell multiple aircraft and lay off workers to raise cash and revive operations [2] Strategic Initiatives - Spirit Airlines has entered into an agreement with its bondholders aimed at reducing total debt and providing increased financial flexibility [3] - The company aims to strengthen its balance sheet and position itself for the future while executing strategic initiatives to enhance guest experience and provide greater value [4] Customer Operations - Despite the bankruptcy filing, Spirit Airlines stated that guests can still book flights and use all tickets, credits, and loyalty points as normal [5]

Core Viewpoint - Spirit Airlines has filed for Chapter 11 bankruptcy protection, marking the first major U.S. passenger carrier to do so in 13 years, but it will continue operations while restructuring to improve its financial situation [2][4]. Financial Situation - Spirit Airlines has been losing money since 2019, with financial difficulties exacerbated by the pandemic, rising industry costs, grounded Airbus jets due to an engine recall, and a blocked acquisition by JetBlue Airways [4]. - The airline is struggling to renegotiate $1.1 billion in debt payments due next year, with a critical deadline approaching related to its credit-card processing agreement [5]. - Spirit has reached a prearranged deal with the majority of its bondholders for a streamlined Chapter 11 bankruptcy protection plan, expecting to exit this process in the first quarter of 2025 [5][14]. Operational Impact - Filing for Chapter 11 does not mean the airline will cease operations; it allows Spirit to reorganize its business, which may involve shedding assets or parts of its operation [6]. - The airline is likely to maintain its schedule during the holiday season, a peak revenue period, but additional cuts may follow [8]. Customer Considerations - Customers are entitled to cash refunds if their flights are canceled and not rebooked, but bankruptcy protection may complicate the refund process [9][10]. - Travelers are advised to use credit cards for purchases to benefit from better cancellation protections and consider travel insurance for prepaid expenses affected by bankruptcy [12][13]. Future Outlook - Spirit expects to emerge from Chapter 11 bankruptcy protection in early 2025, potentially as a smaller, more cost-efficient airline [14]. - There is speculation that Spirit may revisit a merger with Frontier Airlines, especially with a potentially favorable regulatory environment under the incoming Trump administration [15].

Advertisement Spirit Airlines has filed for Chapter 11 bankruptcy protection, it said Monday.The airline will continue to operate as normal, and all tickets remain valid, it added.Spirit has struggled since a proposed merger with JetBlue was blocked by a federal judge in March.Spirit Airlines has filed for Chapter 11 bankruptcy protection, it said Monday morning.In an open letter to customers, the budget airline said people can continue to book tickets and fly as normal as it undergoes a financial restruct ...

Spirit Airlines, an icon of budget air travel that reshaped the industry, has filed for bankruptcy protection after years of mounting losses, a failed merger and more demanding consumer tastes.The carrier early Monday announced a prearranged deal with its bondholders including $300 million in debtor-in-possession financing. It said that vendors, aircraft lessors will not be impaired.The airline said it expects to continue operating normally "throughout this prearranged, streamlined chapter 11 process" and s ...

Flights, Ticket Sales, Reservations and All Other Operations Continue as NormalRestructuring Support Agreement Already Signed by a Supermajority of Spirit's Bondholders Voluntary Prearranged Chapter 11 Proceedings Commenced to Implement the Agreed Deleveraging and Recapitalization Transactions Receives Backstopped Commitments for $350 Million Equity Investment and $300 Million in Debtor-in-Possession Financing from Existing Bondholders; Vendors, Aircraft Lessors and Holders of Secured Aircraft Indebtedness ...