November 18, 2024
Thom Carroll/for PhillyVoice
Spirit Airlines, which serves Philadelphia International Airport and Atlantic City International Airport, filed for bankruptcy protection on Monday. But the discount carrier said service will continue as usual.
Spirit Airlines filed for bankruptcy protection on Monday, after facing multiple financial setbacks in recent years.
The Florida-based company will attempt to bounce back after struggling to recover from pandemic-related dips in travel, increased competition from larger carriers and failures to merge with other airlines, the Associated Press reported. Spirit is the lone commercial carrier at Atlantic City International Airport and also serves Philadelphia International Airport, but there's no need for local travelers to panic just yet: the carrier said service should continue as usual.
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In a statement Monday, Spirit — the largest U.S. budget airline — said it "expects to continue operating its business in the normal course throughout this prearranged, streamlined chapter 11 process. Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal." The company also said the process will not impact team members' wages or benefits, and will not affect the payment of vendors and aircraft lessors.
Officials with the Philly and Atlantic City airports echoed the airline's sentiments.
"Spirit has assured its passengers and the airport that operations will continue as usual during this process," said Heather Redfern, public affairs manager for the Philly airport. "We believe there will be minimal, if any, impact on PHL Spirit passengers."
Tim Kroll, director of the Atlantic City airport, said: "The management of the Atlantic City International Airport (ACY) is aware of the recent bankruptcy filing by Spirit Airlines, and like many in the aviation industry, we are closely monitoring the situation. However, we want to make it clear we have not been notified by Spirit of any changes to their flight operations or frequency at ACY and will continue to work with Spirit and all of our partners to ensure that passengers experience a smooth and uninterrupted travel experience.
"At this time, it is very much business as usual at Atlantic City International Airport."
In April, Spirit said it would shut down its crew base at the Atlantic City International Airport by September. Around the same time, Spirit also announced its agreement with Airbus to defer the delivery of new planes and furlough 260 pilots. The company said these moves would save them $340 million over the next two years.
Spirit has lost more than $2.5 billion since the start of 2020 and faces debt payments totaling more than $1 billion in 2025 and 2026, AP reported. In 2022, Spirit had plans to merge with fellow bargain carrier Frontier Airlines. That proposal was abandoned later that year when JetBlue Airways stepped in with a more lucrative offer. But then that deal fell through in January when a federal judge blocked Spirit's proposed merger with JetBlue, citing that the deal would harm consumers.
The company said it has received commitments for a $350 million equity investment from existing bondholders and will convert $795 million of its debt into stock in the restructured company. Bondholders will also provide an additional $300 million to the airline to help fund operations through the bankruptcy process. Spirit said it expects that the restructuring process will reduce its debt, provide increased financial flexibility, position the company for long-term success and provide guests with "enhanced travel experiences and greater value." But it's also possible Spirit could end up being bought by another airline or be forced to liquidate, CNN reported.
Airlines, and other companies in the United States, frequently file for bankruptcy and emerge in a better financial place after. In the past 25 years, the three largest airlines in the country — American, United and Delta — have all filed for bankruptcy, CNN reported. The last bankruptcy by a major U.S. carrier ended when American Airlines emerged from Chapter 11 protection and merged with US Airways in 2013, according to the AP.
While Spirit is currently the only commercial carrier at the Atlantic City airport, American Airlines offers a service where customers can go through security at the small Atlantic City airport before hopping on a bus to catch their flights at the Philly airport. From Atlantic City, Spirit offers direct flights to several Florida cities as well as Myrtle Beach. From Philadelphia, Spirit offers a wider range of options for direct domestic and international destinations.
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