Spirit Airlines files for bankruptcy amid financial struggles

According to CNN, Spirit employs nearly 13,000 full-time and part-time workers along with 8,000 independent contractors and temporary staff. The U.S. Treasury Department is listed as Spirit’s second-largest creditor due to an unsecured loan of $136 million provided through a federal program initiated during the pandemic.

The Wall Street Journal reported that discussions about Chapter 11 bankruptcy began in October, which caused a sharp decline in Spirit’s stock price by nearly 40%. Since then, Spirit’s shares have lost more than 86% of their value since the beginning of the year.

Financial challenges have plagued Spirit Airlines for years. The company has not recorded an annual profit since before the COVID-19 pandemic began. Earlier this year, a proposed merger with JetBlue was blocked by the U.S. Department of Justice (DOJ), which argued it would reduce consumer choice and increase ticket prices. This decision was upheld by a federal judge in January.

Without the merger with JetBlue, Spirit's financial situation worsened due to its $3.3 billion debt load, including $1.1 billion in secured bonds due within the next year. This led Spirit into negotiations with bondholders regarding Chapter 11 bankruptcy support.