In a move that was not completely unexpected in the aviation industry, Spirit Airlines has declared bankruptcy.
Overall, financial woes and a failed merger with JetBlue Airways were the culprits for the low-budget carrier. Ironically, the Department of Justice went to federal court to block the merger over fears that Spirit would go away and prevent competition for customers.
The filing comes just days before what is expected to be a record travel rush for the Thanksgiving holiday.
The airline did reach a deal with its bondholders for the bankruptcy, but expects to emerge from it early next year. All tickets and loyalty points will be honored in the interim.
“The most important thing to know is that you can continue to book and fly now and in the future,” Spirit CEO Ted Christie wrote in a letter to customers on Monday.
Spirit is the first major U.S. airline to file for Chapter 11 since American Airlines in 2011. Spirit shares have fallen more than 90 percent this year, including more than 50 percent over a matter of days last week.
Spirit said it reached a deal for $350 million in equity and “will complete a deleveraging transaction to equitize $795 million of funded debt.” Spirit will be delisted from the New York Stock Exchange, the company said. The carrier has not had a profitable year in five years. It has already laid off about 200 pilots and expects to do so with 300 more in January.
Talks with Frontier Airlines about a potential merger have apparently broken off.
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