Hailey Whitlock, Staff Writer 

On Nov. 18, 2024, Spirit Airlines filed for bankruptcy among heaping debt and increased competition within the budget-friendly air travel space. As documented by the Wall Street Journal, the airline filed a chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York in which the company sought to restructure much of their debt to bondholders. 

Previous indicators have illuminated select reasons for this decision, such as financial problems in the wake of COVID-19. In fact, according to AP News, Spirit has lost more than $2.5 billion since the start of 2020, as well as accruing increasingly high debt. As referenced by CNN, Spirit reported operating losses of $360 million for the first half of 2024, approximately four times the losses reported over this time period in 2023. A further sign of trouble for the airline came when Spirit announced plans to cut its schedule for flights from October through December by nearly 20% in comparison to the same period last year, as stated by AP News. This adjustment comes in a peak flying season for airlines as travel spikes during these winter months. 

However, before understanding a clear picture of Spirit’s struggles, it is essential to truly comprehend the space in flying they thrive in. Spirit is known as a budget-friendly way to fly, with low base fares that increase with add-ons such as carry-on bags. As mentioned by CNN, the average domestic round-trip economy fare for this year (thus far) is $136 before taxes and fees according to data from Cirium, an analytics firm which specializes in aviation. This is 61% lower than the U.S. industry’s average. With increased competition in the no-frills inexpensive travel department, Spirit has struggled to succeed financially. 

Nevertheless, declaring bankruptcy is not necessarily the end for the popular flight service; bankruptcy is a common problem that failing airlines face. As discussed by AP News in the past 25 years most major U.S. airlines, particularly the three largest – American Airlines, United and Delta – have declared bankruptcy in the past 25 years. The Wall Street Journal postulates that these bankruptcies spiked dramatically following 9/11 as customers began to worry about the safety of air travel. However, Spirit is the first major passenger airline to declare a chapter 11 bankruptcy since 2011 when American Airlines did so, the Wall Street Journal reports. 

Spirit has stated that while the bankruptcy process is ongoing, the use of rewards points and booked flights will continue to operate unchanged. While Spirit has committed to making the process as uninterrupted as possible, Sarah Foss, the global head of legal and financial services company, Debtwire, warns that this may not be enough. In a quote sourced from AP News, Foss questions, “If you’re someone that’s booking your holiday December travel… are you going to book Spirit which is in bankruptcy? Or are you going to choose maybe Southwest or Delta – or something else that you view as potentially being more stable?” She states that while loyalty programs should remain untouched, the consumer response to the bankruptcy news could hurt the company. With approximately 34.3 billion frequent flyer miles worth about $105 million currently unredeemed, she cautions that customers may panic and rush to use these benefits. She states, “A rush to use these miles or otherwise have its customers choose another airline to travel for the holidays could be disastrous for the airline’s reorganization efforts.” 
In light of these concerns, Spirit has looked into possible mergers over the past few years. According to the Wall Street Journal, it was contemplating a deal with Frontier Airlines in 2022, until a more profitable offer was made by JetBlue. However, in January a federal judge banned this potential acquisition, citing that it could raise airline costs for the budget focused traveler at an alarming rate. Following this, Spirit attempted to renegotiate with Frontier who were no longer interested in the company. The future of the airline will be in the hands of upper management, as they attempt to cut costs, regain consumer loyalty and potentially merge with another airline.