Spirit Airlines Exits Bankruptcy… But Now What?!?

In November 2024, Spirit Airlines filed for Chapter 11 bankruptcy protection, after billions of dollars of losses since the start of the pandemic, plus a failed takeover by JetBlue. We knew that the airline was planning on a quick bankruptcy process, and there’s now a major update, as this process has been completed. What I can’t wrap my head around is what the company’s plan is, exactly.

Spirit Airlines exits bankruptcy, taken private

As of March 12, 2025, Spirit Airlines has exited Chapter 11 bankruptcy protection, via a lender-backed take-private deal. With this, control of the airline has gone to a group that includes Citadel Advisors, Pacific Investment Management Co., and Western Asset Management Co.

In recent times, Frontier Airlines tried to make multiple bids to acquire Spirit while in bankruptcy, but that was ultimately rejected, with Spirit claiming it wouldn’t deliver as much value to creditors.

This restructuring deal sees the airline cutting around $795 million in debt, with bondholders committing to injecting $350 million into the company, via an equity-rights offering.

Existing shares of Spirit Airlines stock have been canceled. Newly issued shares now held by Spirit’s new owners are expected to trade in the over-the-counter marketplace, and the company hopes to re-list its shares on a stock exchange as soon as reasonably practicable.

Ted Christie continues to be the company’s CEO, and he had the following to say about the company completing its financial reorganization:

“We’re pleased to complete our streamlined restructuring and emerge in a stronger financial position to continue our transformation and investments in the Guest experience. Throughout this process, we’ve continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success. Today, we’re moving forward with our strategy to redefine low-fare travel with our new, high-value travel options.”

“I’m incredibly proud of our Team Members for their continued dedication to our Guests and each other throughout this process. Despite the challenges we’ve faced as an organization, we’re emerging as a stronger and more focused airline. On behalf of the executive team, I would also like to thank our outgoing board members for their contributions and invaluable service to our airline.”

But how does Spirit stop losing bundles of money?

While it’s great that Spirit Airlines has had a pretty quick bankruptcy process, I can’t actually wrap my head around what the strategy is here. Spirit’s problem wasn’t simply that it had a huge amount of debt, but also that the airline has been reporting massive operating losses, and continues to do so.

Spirit’s operating losses are just unbelievably bad, and keep getting worse. For example, in 2024, the airline had a negative 22.5% operating margin, with an operating loss of $1.1 billion on $4.9 billion of revenue. Not only that, but nothing about the carrier’s financial performance actually seems to be heading in the right direction.

That performance is significantly worse than the previous year. The company’s yields have dropped, the average revenue per passenger segment has dropped, etc. As Spirit has tried to become more “premium” and has eliminated fees, the carrier’s financial performance has only worsened.

Injecting $350 million into the company? Great, Spirit will burn through that in a matter of months just operating flights! I just don’t see any way that Spirit continuing to operate independently will work out, because numbers don’t lie.

Do the new owners want to break up the company and sell individual components? But what is there to sell at this point, with a vast majority of aircraft leased. Or is there some advantage to trying to reach a deal with another airline outside of bankruptcy, rather than in bankruptcy? At this point, I don’t see any planet on which Spirit has an independent future.

Bottom line

Spirit Airlines has emerged from bankruptcy protection, and has been taken private, with several investment firms partnering to own the company.

Given that Spirit’s operating losses are now exceeding a billion dollars per year, and given that the company’s financial performance keeps getting worse, I’m scratching my head as to what the strategy is here. Injecting $350 million into the company will cover the carrier’s operating losses for several months, maybe.

What do you make of Spirit emerging from bankruptcy, and what do you think the plan is?