NEW YORK (AP) — Spirit Airlines, the largest budget carrier in the U.S., filed for Chapter 11 bankruptcy protection Monday. The airline said customers should not see any disruption to their travel plans while the process unfolds.
The filing followed years of struggles for the Florida-based airline, which is known for its no-frills, low-cost flights. Spirit failed to bounce back from the COVID-19 pandemic, largely due to rising operating expenses and stiffer competition. The airline has lost more than $2.5 billion since the beginning of 2020 while also racking up mounting debt.
The bankruptcy proceedings are aimed at restructuring the company and shoring up its finances. Still, unease around the bankruptcy petition may have some travelers looking elsewhere for flights ahead of the busy holiday travel season.
Here’s what you need to know.
Will the Chapter 11 affect my booking or loyalty points with Spirit?
For now, it’s business as usual. Spirit says it expects to continue operating normally throughout the bankruptcy process, and that travelers can continue making reservations and taking flights without interruptions.
All existing tickets, credits and loyalty points remain valid, as do the airline’s affiliated credit cards and other membership perks, the company said.
Reassuring customers that the bankruptcy won’t impact their travel plans or loyalty programs will be crucial to Spirit’s short-term ability to preserve business, according to Sarah Foss, global head of legal at financial services company Debtwire.
“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?” Foss said.
As long as Spirit is on track to reach a deal with lenders relatively quickly and avoid wider liquidation, frequent flyer miles and other loyalty program should remain untouched, she said. But the response from customers to the Chapter 11 could threaten the company’s turnaround efforts.
Foss said Spirit estimates show some 34.3 billion frequent flyer miles worth about $105 million are currently unredeemed. “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,” she said.
Will there be fewer flights available down the road?
While Spirit says currently scheduled flights won’t be affected, the airline already warned about tightened capacity before Monday’s filing and said it would reduce the number of trips it offered in the coming months.