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Spirit Airlines files for Chapter 11 bankruptcy but continues operations

Spirit Airlines files for Chapter 11 bankruptcy but continues operations
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Nicky Kelvin Senior director of content | The Points Guy

Spirit Airlines has filed for Chapter 11 bankruptcy protection, marking the first major U.S. airline to do so since 2011. Despite the filing, Spirit plans to continue operating its flights and paying its staff as usual during the bankruptcy proceedings.

The airline's move follows a precedent set by other major U.S. carriers like American, Delta, and United, which have all filed for bankruptcy in the past two decades but continued operations largely unaffected. American Airlines, for instance, filed for Chapter 11 in 2011 and emerged from it in 2013 after merging with US Airways.

While Spirit does not anticipate immediate flight or route cancellations due to the bankruptcy, it is looking to overhaul its business model for profitability. This process was already underway before the filing and may lead to incremental changes over time.

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As the holiday season approaches, Spirit expects to maintain its normal schedule. However, flights on ultra-low-cost carriers such as Spirit inherently carry a higher risk of route changes compared to other airlines.

Spirit has assured customers that its Free Spirit loyalty program will continue without interruption. Vouchers and credits with the airline remain valid, and terms of its cobranded credit card are unchanged during the proceedings.

Addressing concerns about going out of business, Spirit stated: "Absolutely not!" The Chapter 11 process is designed to protect companies from creditors while they reorganize their finances and business models. It differs from Chapter 7 bankruptcy where operations typically cease.

For travelers seeking additional booking protections with Spirit, using a credit card offering travel protections or purchasing trip insurance could provide peace of mind against potential disruptions.

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