Title: Spirit Airlines Announces Job Cuts as Bankruptcy Looms
Spirit Airlines, facing financial struggles with mounting debt and quarterly losses, sought relief in November 2024 by filing for Chapter 11 bankruptcy protection, a move not seen among major US airlines since 2011. With a reported net loss of $308.2 million and cash reserves totalling $593.6 million, the airline looked to restructure its operations and finances.
As part of its reorganization plan, Spirit Airlines submitted a pre-arranged Chapter 11 plan and disclosure statement on November 26, 2024. The airline also launched a $350 million equity rights offering and secured $300 million in post-bankruptcy financing from its debtholders. These measures aimed to boost its financial stability and liquidity.
Cost-cutting was also a key focus, leading Spirit Airlines to announcing the layoff of about 200 employees to reduce expenses and align its organizational structure with its current fleet size and level of flying.
Looking ahead, Spirit Airlines' strategy involved emerging from bankruptcy with a focus on premium in-flight experiences. This shift towards a more upscale business model included the introduction of premium-class fares to attract a more discerning clientele and drive market share growth.
Securing a $300 million credit facility was crucial to provide working capital and ensure operational continuity during its post-bankruptcy journey. However, the airline faced challenges such as stringent repayment conditions, a competitive market landscape, and addressing engine deficiencies, mounting losses, and looming debt maturities amidst changing consumer tastes.
The airline, with nearly 13,000 employees and 8,000 independent contractors and temporary workers, was exclusively impacting non-union workers with the job cuts. Spirit Airlines also reached a deal with Airbus to delay all aircraft deliveries scheduled from the second quarter of 2025 through 2026 and furloughed 260 pilots to achieve its target of $80 million in annualized cost reductions.
The restructuring of Spirit Airlines' operations and finances was primarily aimed at improving its business performance. Following the bankruptcy filing, the airline introduced premium-class fares as part of its shift towards a more upscale business model.
