The Biggest US budget transporter Spirit Airlines has filed for bankruptcy as debt payments impend on the company.

Spirit Airlines known for its ultra-low-cost carrier (ULCC) has found itself in turbulence. Known for its bright yellow planes and budget-friendly fares, the company is now bearing rumors of potential bankruptcy. According to reports, the airlines filed for bankruptcy protection on Monday. These swirling rumors are making travelers and experts wonder: Will Spirit Airlines fly high or crash?

A History of Setbacks

Shares of Spirit Airlines, based in Miramar, Florida, fell 25% on Friday after the Wall Street Journal reported that it was discussing terms of a bankruptcy filing with shareholders. It’s the latest in a slump that has seen shares fall 97% since the end of 2018, when Spirit was still profitable.

Backing up to January, The airline, which is due to report full-year earnings in 2019, has struggled to find solid ground since a federal judge blocked its planned merger with JetBlue in January. Spirit Airlines has also struggled to weather the pandemic amid intense competition, engine problems, and other problems. The company has lost more than $ 2.2 billion since the start of 2020.

Spirit’s Confession.

The airline’s chief executive, Ted Christie, said the arrangement announced Monday represented “a strong vote of confidence in Spirit and our long-term plan.”
The airline said in court that as of the end of September, it had between 25,000 and 50,000 creditors, totaling about $9 billion in debt, and just over $1 billion in assets. The company said its shares would be listed on the New York Stock Exchange. Spirit’s shares have fallen more than 90% since the beginning of the year.

The airline said it expects to operate as usual as it strives to work through a prearranged Chapter 11 bankruptcy process. It claims that the customers can continue to book flights without interruption. The company said that all tickets, credits, and loyalty points remain valid, as are affiliated credit cards and other membership perks.

Habit of Cutting Costs

Spirit Airlines has identified its niche in the airline world by pricing tickets at rock-bottom levels. But this strategy carries a price: Complimentary snacks, seat selection, and in-flight entertainment are all luxuries for passengers willing to pay the lowest prices possible. Spirit also squeezes the highest number of passengers possible onto its planes, leading to a very cozy ride.

Gasoline on the Fire of Financial Distress

The global economic downturn has severely affected the airline industry, among many others. While soaring fuel prices have realized every cent of squeezed profit margins for Spirit, labor disputes with pilots and flight attendants have continued to make the company’s future uncertain.

Seeking Answers: Is Bankruptcy Inevitable?

Analysts are split on Spirit’s future; some think that the difference of having an airline with a loyal customer base coming to save their pennies will help the airline stay afloat. Others tout the fact that Spirit Airlines is hemmed in by its heavy debt burden and the poor economic climate as why Spirit might sink into bankruptcy.

What Does This Mean for Travelers?

Travelers thinking of holding a ticket with Spirit Airlines on board for the festivities may be wondering what the potential implications are for the airline. Here are the key takeaways:

Higher Scrutiny: A threat of bankruptcy can potentially land Spirit under more scrutiny by the FAA in regard to continued airworthiness as a financially viable carrier. This could affect flight schedules and operations.

Potential Fare Hikes: Filing for bankruptcy might compel Spirit to rethink their pricing models. This means increases in fares as the airline looks to gain extra revenue.

Future Outlook: What’s in Store for Spirit Airlines?

The future for Spirit Airlines remains uncertain. Its management, meanwhile, has been aggressive in pursuing options, such as cutting costs, potential mergers with other carriers, even restructuring through bankruptcy. Ultimately, the future of Spirit Airlines will lie in its ability to navigate the current economic climate, address internal challenges, and adapt to the everchanging industry landscape.