What travelers need to know about Spirit Airlines' bankruptcy

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].