Spirit Airlines has around $3.3 billion in debt, out of which $1.1 billion is due next October|Tomas Del Coro|CC BY-SA 2.0
Spirit Airlines, known for its budget flights and extra charges, is considering filing for Chapter 11 bankruptcy, according to the Wall Street Journal. The news sent its stock plummeting 24% on Friday.
The company suffered a failed merger with JetBlue this January, 11 straight quarterly losses in August, and around $3.3 billion in debt, out of which $1.1 billion is due next October.
Since the 2020 pandemic, the budget-friendly carrier has been hard hit by higher costs and changing travel patterns. It also faces stiff competition from bigger airlines that have copied its low-fares model.
Spirit’s fleet has also been affected by engine recalls, which have caused growth problems. To cut costs, Spirit had to furlough 186 pilots.
Spirit CEO Ted Christie recently said they are working hard to find the best solution. The airline’s shares are already down 90% this year.
Meanwhile, Frontier Airlines, which initially tried to merge with Spirit, saw its stock rise after the news of the financial struggles.