Spirit Airlines filed for bankruptcy protection. What does it mean for traveling?

Budget airline Spirit Airlines filed for bankruptcy protection Monday after struggling with declining sales prompted by the COVID-19 pandemic and failed merger attempts.

The company estimated its assets and liabilities are between $1 billion and $10 billion each, according to a court filing.The news comes on the heels of a failed $3.8 billion merger with JetBlue Airways, plus issues with engines manufactured for the type of aircraft Spirit uses, grounding many of its planes.

In October, the company announced it would furlough hundreds of pilots among other cuts beginning next year. When the Wall Street Journal reported last week that a potential bankruptcy filing was imminent, Spirit’s shares dropped 25%. The company expects to be delisted from the New York Stock Exchange soon, USA Today reported.

As part of its Chapter 11 bankruptcy protection, the airline has received a commitment for a $350 million equity investment from existing bondholders which is expected to reduce the company’s debt.

Spirit is Philadelphia International Airport’s third-largest airline carrier, according to the Philadelphia Business Journal. Last year, the airline flew nearly two million travelers out of the city.

So, what does all of this mean for the everyday traveler? Is the bright-yellow branded airline no longer an option for travelers? Here’s what we know.

Spirit said it plans to continue its flight operations through the bankruptcy proceedings.

“If you’ve already gotten notice of your flight canceled or [that it] had to be rebooked, you’ve already gotten that notice,” Robert W. Mann Jr., a former airline executive officer who runs an independent airline consultancy, told USA Today.

Mann said that it’s possible travelers will see more updates to their already booked flights by the end of the year. Travelers should look for notifications and itinerary changes from Spirit.

Spirit says customers can continue to book flights with the company and flights are still available on Spirit’s website.

Still, some experts caution that travelers may want to book elsewhere to avoid issues later on.

“It would be wise to rebook flights if you have flexible tickets as it’s uncertain how quickly the bankruptcy will be resolved for Spirit,” business consultant Arjan Singh told The Inquirer. “You don’t want to go to the airport to find out your flight or airline is not operating.”

In its open letter to Spirit customers, the airline said it expected to complete the bankruptcy process within the first quarter of 2025 and to “emerge even better positioned to deliver the best value in the sky.”

The company added that “other airlines that are operating successfully today have undertaken a similar process,” referring to airlines like American Airlines and United, which filed for bankruptcy in 2011 and 2002, respectively.

Mamie Jones, an organizational change expert and former vice president of technology at Intuit, also advises having a backup flight in mind.

“Airlines are notorious for giving information, only for it to be updated over and over again causing stress to travelers, especially if a trip is a special occasion that would be devastating to impact,” Jones said.

If a flight booked with Spirit gets canceled, it will be subject to the new Department of Transportation rules regarding flight refunds.

According to the recently finalized rules, airlines are required to fully refund a flight if it’s canceled or delayed for more than three hours on a domestic flight, or for six hours on an international flight for any reason. Eligibility depends on if travelers do not opt to fly on the delayed flight or if an alternative travel itinerary is offered by the airline.

Spirit said its loyalty points program — Free Spirit — will continue and that travelers can keep using their rewards.

Spirit is known for its low base fares and no-frills traveling options.

According to the aviation analytics firm Cirium, an average Spirit domestic round-trip economy fare this year cost $136 before taxes and fees, 61% lower than the U.S. airline industry’s average fare and 69% lower than the average fare for the four major U.S. airlines: American, United, Delta, and Southwest.

“Budget airlines need to be big to compete,” Singh said. “[The bankruptcy filing] puts the bigger players like Southwest and JetBlue in a very strong position; the other smaller players will continue to struggle.” Singh says consumers can likely expect to see more airline consolidation in the form of mergers and acquisitions moving forward.

It also means that pricing could be affected on a short-term basis while other budget airlines see travelers switching their flights from Spirit, Singh predicted. His advice to take the most advantage is straightforward: “Book early to get the best prices.”