Spirit Airlines to File for Bankruptcy Protection After Failed Merger Talks with Frontier Airlines

Following failed merger discussions with Frontier Airlines, Spirit Airlines is now making preparations to file for bankruptcy protection. The Florida-based budget carrier had been in advanced talks with bondholders to solidify a bankruptcy plan that would secure the support of the majority of creditors. This decision comes as Spirit faces significant losses and mounting debt obligations, with expectations for the bankruptcy filing to occur within weeks.

Earlier this year, Spirit encountered obstacles when its planned merger with JetBlue Airways was blocked by a U.S. court due to anti-competition concerns. Subsequently, efforts were made to explore the possibility of merging with Frontier as part of a broader restructuring strategy during these challenging times. However, Frontier opted not to proceed with the merger at this juncture.

Spirit Airlines has struggled to maintain profitability, announcing that it has failed to report a profit in five out of the last six quarters. Despite robust travel demand, the company has faced financial difficulties, leading to the need to reduce costs and enhance its financial position. As part of cost-cutting measures, Spirit intends to furlough around 330 pilots at the end of January 2025.

Moreover, the airline is taking steps to bolster its liquidity by selling 23 older Airbus aircraft for $519 million, with an estimated $225 million in proceeds expected to contribute to next year's liquidity. These strategic moves are aimed at ensuring the company's financial stability amid the challenging economic environment in the aviation industry.

While Spirit Airlines did not immediately respond to requests for comment on the impending bankruptcy filing, news reports highlight the downward trend in the company's stock value. Following the breakdown of merger talks with Frontier, shares of Spirit fell substantially, emphasizing the financial strain the airline is currently facing.