Spirit Airlines announced on Wednesday that it is on the hunt for profits after successfully emerging from Chapter 11 bankruptcy protection.
After failing to turn a profit since the start of the COVID-19 pandemic, mounting debt and failed merger attempts forced the ultra-low-cost carrier to file for bankruptcy protection in November 2024 in an attempt to reduce its $1.6 billion debt.
Spirit gained significant financial flexibility by converting about $795 million of funded debt into equity, along with an investment of another $350 million in equity from existing investors to support Spirit’s future initiatives. This latest investment will be used to “provide Guests with enhanced travel experiences and greater value.”
In a statement, Ted Christie, President and Chief Executive Officer, said:
“We’re pleased to complete our streamlined restructuring and emerge in a stronger financial position to continue our transformation and investments in the Guest experience.
“Throughout this process, we’ve continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success. Today, we’re moving forward with our strategy to redefine low-fare travel with our new, high-value travel options.”
Credit: Tomás Del Coro/Flickr | CC BY-SA 2.0 GenericAs part of the restructuring efforts, all common stock issued by Spirit Airlines, Inc. was cancelled. Spirit Airlines will now operate under new parent company Spirit Aviation Holdings, which will trade shares via the over-the-counter marketplace. They also plan to re-list its shares on the stock exchange once its reasonable to do so.
Prior to the pandemic, Spirit Airlines and other low-cost, and ultra-low-cost carriers successfully navigated the no-frills business, but with traveler habits changing significantly during the pandemic, they were unable to keep up.
On the other hand, legacy carriers quickly figured out that customers were willing to pay more for an improved premium experience, while still being able to carve out a basic economy segment for those still wanting to travel on a tight budget.
Credit: Spirit AirlinesIt’s not entirely clear yet what Spirit plans to do to attract more affluent customers, but the company’s CEO said:
“Right now, the business is entirely focused on this exit and on revamping the products and services, and taking a hard look at where we fly and our cost structure to put us on the best possible financial trajectory.”
Prior to this, Frontier Airlines proposed a $2.16 billion acquisition offer in mid-February, but was turned down after Spirit felt it wouldn’t be as beneficial to the airline, and its stockholders, versus their then-ongoing restructuring plans.
Featured image: Bradley Wint/Gate Checked
