Spirit Airlines warns of shareholder losses amid bankruptcy restructuring

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Spirit Airlines warns of shareholder losses amid bankruptcy restructuring

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Airbus A380 | Airbus

By Sky Industry News

Dec 18, 2024

Spirit Airlines, based in Florida, has announced that its shareholders are likely to see their shares wiped out as the airline undergoes a restructuring process. The carrier recently filed for Chapter 11 bankruptcy following unsuccessful attempts to merge with Frontier Airlines.

The airline has been seeking an investment partner due to a significant drop in revenue. Failed merger bids with JetBlue and Frontier have left Spirit's future uncertain. On Tuesday, Spirit Airlines publicly confirmed that shareholders are expected to lose their investments as bondholders take control of the company. Marshall Heubner, the airline's lawyer, stated that filing for Chapter 11 was a last resort.

Bloomberg reported that shareholder letters were sent to Judge Sean Lane, who criticized the CEO's support for restructuring deals that disadvantage shareholders. The United States Justice Department watchdog noted that shareholders have requested a formal committee meeting before any major decisions are made. Currently, shares are trading at approximately $0.60.

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In recent developments, Spirit Airlines received approval from the United States Bankruptcy Court to sell 23 Airbus A320 and A321 aircraft. This move aims to reinvest liquidity into the airline and streamline operations.

Spirit Airlines operates around 200 aircraft across 91 destinations domestically and internationally. Originally starting as Charter One Airlines, it now serves various U.S., Caribbean, and Latin American locations with its all-narrowbody Airbus fleet.

Despite financial challenges, Spirit is known for its ultra-low-cost fare model and bright yellow livery. The airline charges extra for services like meals and baggage beyond basic fares.