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Spirit Airlines filed for insolvency. What does that cruel for travelers?


recent YORK — Spirit Airlines, the largest apportionment carrier in the U.S., filed for Chapter 11 insolvency protection Monday. The airline said customers should not view any disruption to their trip plans while the procedure unfolds.

The filing followed years of struggles for the Florida-based airline, which is known for its no-frills, low-expense flights. Spirit failed to bounce back from the COVID-19 pandemic, largely due to rising operating costs and stiffer competition. The airline has lost more than $2.5 billion since the beginning of 2020 while also racking up mounting obligation.

The insolvency proceedings are aimed at restructuring the business and shoring up its finances. Still, unease around the insolvency petition may have some travelers looking elsewhere for flights ahead of the busy holiday trip period.

Here’s what you require to recognize.

For now, it’s business as usual. Spirit says it expects to continue operating normally throughout the insolvency procedure, and that travelers can continue making reservations and taking flights without interruptions.

All existing tickets, credits and loyalty points remain valid, as do the airline’s affiliated financing cards and other membership perks, the business said.

Reassuring customers that the insolvency won’t impact their trip plans or loyalty programs will be crucial to Spirit’s short-term ability to preserve business, according to Sarah Foss, global head of legal at monetary services business Debtwire.

“If you’re someone that’s booking your holiday December trip … are you going to book Spirit, which is in insolvency? Or are you going to choose maybe Southwest or Delta — or something else that you view as potentially being more stable?” Foss said.

As long as Spirit is on track to reach a deal with lenders relatively quickly and avoid wider divestment, frequent flyer miles and other loyalty program should remain untouched, she said. But the response from customers to the Chapter 11 could threaten the business’s turnaround efforts.

Foss said Spirit estimates display some 34.3 billion frequent flyer miles worth about $105 million are currently unredeemed. “A rush to use these miles or otherwise have its customers choose another airline to trip for the holidays could be disastrous for the airline’s reorganization efforts,” she said.

While Spirit says currently scheduled flights won’t be affected, the airline already warned about tightened capacity before Monday’s filing and said it would reduce the number of trips it offered in the coming months.

In a highly unusual shift, Spirit announced plans to cut its October-through-December schedule by nearly 20%, compared with the same period last year. The airline also has had to ground dozens of its Airbus jets due to required repairs to Pratt & Whitney engines.

A reduced schedule should assist prop up Spirit’s fares, according to some analysts, but it would provide the airline’s rivals more of a boost than Spirit itself. Analysts from Deutsche financial institution and Raymond James declare Frontier, JetBlue and Southwest would advantage the most because of their overlap with Spirit on many routes.

Spirit flies in and out of destinations across the U.S., as well as Latin America and the Caribbean.

The airline’s largest hub is Fort Lauderdale-Hollywood International Airport in Florida. Spirit is the biggest airline at the airport, monetary reporting for 30% of all passengers in August, according to Transportation Department figures.

Spirit’s second-biggest hub is also in Florida. It’s Orlando International Airport, where Spirit follows only Southwest in terms of passenger counts — ranking slightly ahead of Delta, Frontier and American. The airline also has large operations in Las Vegas, Atlanta and Los Angeles. The carrier’s largest maintenance facilities are in Detroit and Houston.

Spirit frequently ranks among U.S. airlines with the highest buyer complaint rates, according to the Transportation Department.

Spirit may still be the biggest discount airline in the U.S., but it faces more competition. The business recorded much of its recent losses as more and more rival carriers began offering their own versions of low expense, no-frills tickets.

Some of Spirit’s biggest competitors are other apportionment airlines, like Frontier and JetBlue, both of which previously tried to merge with Spirit. JetBlue and Spirit abandoned their latest deal this year after a federal judge sided with the fairness Department in its lawsuit to block the $3.8 billion deal, arguing it would drive up prices too much for customers who depend on low fares.

Major carriers also propose competitive, tiered pricing today. Southwest’s “Wanna Get Away” fares and the Basic Economy options offered by United and Delta, for example, have become popular with apportionment-conscious travelers.

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Koenig reported from Dallas.



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