Spirit Airlines to slash flights in bid to emerge from bankruptcy

Spirit Airlines is preparing to shrink to a smaller version of its former self by expanding first-class seating as well as focusing on high-demand travel periods and routes in an effort to survive, according to a new plan unveiled Tuesday in U.S. Bankruptcy Court.

The budget travel icon said it would get rid of even more of its Airbus fleet as it plans to emerge from its second bankruptcy in less than a year. This is expected to occur in late spring or early summer, Spirit’s attorney, Marshall Huebner of Davis Polk, said at a hearing. Spirit said the changes will make the airline leaner and more competitive.

The company said it estimates it will cut costs under the plan and that its debt and lease obligations will fall from $7.4 billion to $2.1 billion following the bankruptcy.

“Spirit will emerge as a strong, leaner competitor that will be positioned to profitably deliver the value American consumers expect at the price they are willing to pay,” Spirit CEO Dave Davis said in a news release outlining the plan on Tuesday.

Spirit will realign its network and schedules to increase aircraft usage during periods and routes when demand is high and reduce usage during times when travel is slow. The carrier also plans to expand its Spirit First and premium economy, as well as update its loyalty program.

The new fleet will consist mostly of older Airbus aircraft, “with the potential rejection of additional higher-cost NEO aircraft,” Huebner said, referring to the more modern Airbus A320 family of aircraft, adding that the exact size of Spirit’s fleet will depend on discussions with counterparts such as aircraft lessors.

He said Spirit’s annual fleet costs would be reduced by $550 million, a 65% drop from before last year’s bankruptcy filing. Borrowers also expect another $300 million in cost savings from non-fleet cuts, he said.

Spirit has already reduced some of its Airbus fleet and furloughed pilots and flight attendants to cut costs as it shrinks its network, but some cabin crew members have been called back to work ahead of spring break.

Spirit has reached an agreement in principle with its creditors for the plan, Huebner said, adding that secured lenders “will provide Spirit with material increased liquidity through the release of cash collateral.”

Spirit also negotiated a settlement in its second bankruptcy. Border Airlinesand with investment firm Castlelake. Nothing materialized, but Huebner hinted that a combination might be on the table again.

“This emergence will allow Spirit to do many things from a strong and stable position, including evaluating potential future industry transactions,” Huebner said.

The path of the soul will be difficult. This will pit a smaller version of the Spirit against increasingly larger rivals that dominate the U.S. market. Some budget carriers in the US have been left struggling by a post-Covid surge in labor and other costs, consumers shifting to more luxury travel and increased competition from larger airlines offering discounted fares.

“Because every day counts and every dollar counts, the airline industry is as competitive today as it was last Friday with this agreement in hand, and we must lock in what we need from other stakeholders, and we will, and then begin a high-speed march to get this storied company out of Chapter 11 as early as possible so it can write its next chapters from a position of strength,” Huebner said.

Spirit has been uniquely challenged by a major engine recall Pratt and Whitney and an unsuccessful plan to be acquired by JetBlue AirlinesA deal that was rejected by a federal judge in early 2024.

Spirit forecasts net profit of $252 million last year, according to a report application to court In December 2024. However A report in August said: It said it lost about $257 million in the few months from March 13 to the end of June after emerging from its first Chapter 11 bankruptcy. Less than a month later, he filed again for Chapter 11 bankruptcy protection.