Spirit Airlines files for Chapter 11 bankruptcy again

Spirit Airlines on Friday filed for bankruptcy protection for the second time in a year, just months after the budget carrier failed return to sturdy financial footing when it came out of Chapter 11 protection in March.

Spirit debtholders agreed in its previous bankruptcy to exchange $795 million in debt for equity, but the carrier avoided bigger changes to cut costs, like getting rid of planes or more dramatically shrinking its footprint.

The Dania Beach, Florida-based airline said under this bankruptcy, it will reduce its network and shrink its fleet, cuts that it said will reduce costs by “hundreds of millions of dollars” a year.

“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” Spirit CEO Dave Davis said in a news release on Friday.

Spirit had expected to come out stronger from its previous bankruptcy, which it entered in November and emerged from in March. But the airline was dragged down by continued high costs and weaker U.S. domestic travel demand.

In a court filing in December, Spirit had forecast a net profit of $252 million this year. But earlier this month, it said it instead lost nearly $257 million since March 13, after it exited Chapter 11, through the end of June.

Spirit warned a few weeks ago that it might not be able to survive a year unless it significantly increased its cash. It also said its credit card processor was seeking additional collateral. It then borrowed the entire $275 million available under its revolving credit facility and said that the card processor could hold back up to $3 million a day from the airline.

The carrier had struggled for years as it dealt with a glut of U.S. flights, a Pratt & Whitney engine recall and a failed takeover by JetBlue Airways, a deal that was blocked in court.

Spirit’s aircraft lessors had reached out to rival airlines in recent weeks to gauge executives’ interest in some of the carrier’s planes, according to people familiar with the matter, who spoke on the condition of anonymity because the talks were private.

Spirit is the United States’ largest budget airline, followed closely by rival Frontier Airlines which has tried and failed to merge with Spirit repeatedly since 2022. Frontier on Tuesday announced 20 new routes that compete with Spirit to win over its struggling competitor’s customers.