Spirit Airlines Is Not Considering a Chapter 11 Bankruptcy, CEO Says

Spirit Airlines CEO Ted Christie told shareholders at an annual meeting Friday morning that the carrier is not considering a Chapter 11 bankruptcy — an outcome analysts have speculated about since the proposed merger with JetBlue collapsed. 

“We are proudly executing to our plan as we’ve exited the merger agreement with JetBlue and are encouraged by the initial results of our standalone plan,” Christie said during the meeting, according to a transcript provided by the company. “We are not evaluating a Chapter 11 at this time.” Christie’s comments were first reported by CNBC.

Spirit has struggled to turn a profit since the pandemic for multiple reasons: Pratt & Whitney engine issues that caused it to ground several of its aircraft; low demand for its low-cost offerings; and an overcapacity of seats in popular leisure markets. 

Speculation that bankruptcy could be on the horizon for Spirit started when a federal judge struck down its proposed merger with JetBlue. Some Wall Street analysts believed at the time that Spirit’s two options were to either find another buyer or consider filing for bankruptcy.

Spirit Races to Boost Its Balance Sheet

S&P downgraded Spirit’s credit rating this past week, saying that it believed the carrier’s operation would “remain pressured through the year.” 

The S&P report also pointed to Spirit’s $1.1 billion in debt that’s expected to mature in September 2025, saying that it believes the carrier will experience a liquidity shortfall. Spirit is currently looking into restructuring some of its debt, and a lower credit rating will hurt its ability to do so. 

The carrier has leased back some of its fleet, delayed the delivery of some of its Airbus jets and hundreds of furloughed pilots to cut costs and strengthen its liquidity. Spirit previously said it expected to receive up to $200 million in compensation for the Pratt & Whitney groundings. 

“Spirit’s debt has been trading significantly below par, which we believe signals lenders’ increasing doubts over the company’s performance and possibly indicating that investors may not be made whole in a refinancing transaction,” the report read. 

Spirit chief financial officer Scott Haralson is also set to leave the company next week to take up the same role at Hertz. 

Executives at the ultra-low-cost carrier have said that they plan to implement a new strategy to restore profitability. So far, Spirit has made some changes to its business model, like getting rid of most change and cancellation fees. The carrier also recently increased checked baggage weight allowance to 50 pounds and extended the eligibility of flight credits from 90 days to one year.