What travelers must learn about Spirit Airlines' bankruptcy

Spirit Airlines has filed for Chapter 11 bankruptcy protection, becoming the primary major U.S. passenger airline to achieve this since then American Airlines 13 years ago.

However, the icon of budget travel shouldn’t be going away. The filing will give Spirit time and protection to restructure, allowing the airline to proceed flying and bringing in much-needed money.

CEO Ted Christie wrote to customers on Monday to reassure them that they will proceed to book flights and use loyalty points or credits as usual.

Here's what travelers must know:

Spirit Airlines has suffered losses since 2019, but financial problems deepened after the pandemic as industry costs rose, dozens of its Airbus jets were grounded due to an engine recall and a federal judge blocked Spirit's planned takeover JetBlue Airways.

The airline has struggled to renegotiate its $1.1 billion in debt payments due next yr. An end-of-year deadline tied to the bank card processing agreement was fast approaching.

Spirit said Monday that it has entered right into a pre-agreed agreement with the vast majority of its bondholders for a “streamlined” Chapter 11 bankruptcy protection plan. This process is anticipated to be accomplished in the primary quarter of 2025.

Filing for Chapter 11 bankruptcy protection doesn’t mean that the airline will stop operations. Rather, it provides the airline with protection when restructuring its business, which regularly means losing assets or parts of its operations.

“From a consumer perspective, you have to pay attention to whether Spirit makes schedule changes or gets rid of planes or lays off pilots and flight attendants — that will have an impact on the traveling public,” said Henry Harteveldt, founding father of travel consulting firm Atmosphere Research Group.

The airline will likely maintain as much of its schedule as possible for the vacation season, when airlines generate a variety of revenue in the course of the popular travel season, but further cuts are unlikely to be long in coming.

Under US regulations, airline customers are entitled to a money refund if the airline cancels their flight and so they aren’t rebooked. Spirit Airlines said Monday it plans to proceed flying, and CEO Ted Christie sought to reassure customers whose bookings in the course of the peak holiday season will herald needed money.

However, the Ministry of Transport warns against this Bankruptcy protection could make it tougher to get a refund.

“If the airline or ticket agent has declared bankruptcy, the company may be temporarily prohibited from providing refunds and/or vouchers – for example, to preserve assets,” the web site says.

The agency says that if an airline that has filed for bankruptcy refuses to reimburse you for a canceled or significantly modified flight, your bank card could provide a refund under the Fair Credit Billing Act.

Even if you happen to get a refund, buying a last-minute airline ticket to switch your original flight could be costly attributable to high demand and limited seats. Harteveldt recommends at all times purchasing airline tickets with a bank card, because it offers customers higher cancellation protection than debit cards or money. If travelers are concerned, they also can book a refundable ticket with one other airline, although this can be very costly.

Travel insurance could They also cover prepaid expenses if the airline's flights change attributable to bankruptcy.

This stays to be seen. Spirit expects the corporate to exit Chapter 11 bankruptcy protection in the primary quarter of next yr. Airlines can emerge from this process as smaller, less expensive airlines. Other airlines lacking planes could snap up a few of Spirit's assets.

Spirit had a deal to merge with one other discount retailer Border before JetBlue got here in with a competing offer. Frontier and Spirit could attempt a merger again, especially as some industry players imagine the brand new Trump administration will probably be relatively friendly to dealmaking.