by Mia Taylor
Last updated: 2:45 PM ET, Wed December 4, 2024
Filing for bankruptcy and restructuring may not be enough to save Spirit Airlines. At least that’s the way United Airlines CEO Scott Kirby sees it.
“I think the current business plan is not going to work and, if they pursue it, Chapter 11 will be a brief pit stop on the way to Chapter 7,” Kirby said at a recent event at Washington’s Dulles International Airport, according to Travel + Leisure.
Kirby’s comments were in reference to the various U.S. bankruptcy codes and options. Under Chapter 7, filers close down altogether and liquidate their assets.
Spirit’s current plan for survival is focused on ramping up its revenue by offering new premium products and fare bundles. The plan does not focus as heavily on addressing the carrier's debt issues.
However, in commentary obtained by Travel + Leisure, a Spirit representative said the airline remains “dedicated to pairing great value with excellent service and firmly believes our low-fare business model is important for competition in the U.S. domestic airline market, which is 80 percent controlled by four dominant carriers.”
The Spirit representative added that its bondholders, “who are highly sophisticated investors, have chosen to become equity holders in Spirit following our prearranged, streamlined chapter 11 process. This is a clear vote of confidence in our business model and long-term path."
Spirit filed Chapter 11 bankruptcy in early November amid financial woes and a failed merger with JetBlue Airways. The carrier is expected to emerge from bankruptcy protection early next year.
Even with its filing and various new plans, however, Spirit is expected to report serious losses this year. Still, Spirit executives maintain that the airline will survive.
“The most important thing to know is that you can continue to book and
fly now and in the future,” Spirit CEO Ted Christie wrote in a letter to
customers when the bankruptcy filing was announced.
Meanwhile, United is reportedly interested in acquiring some Spirit assets, should the budget carrier go out of business, per Travel + Leisure.
Spirit is the first major U.S. airline to file for Chapter 11 since American Airlines in 2011.
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