Spirit Airlines announced on Monday that the low-budget carrier has filed for Chapter 11 bankruptcy protection amid continued financial quarterly losses and mounting debt that is now coming due.
According to Monday's court filing, Spirit currently has $1 billion in assets and a whopping $10 billion in debt.
The bankruptcy announcement follows several actions to hold off on this desperate action, including two recent unsuccessful attempts to merge with other airlines - first Frontier, then JetBlue - and plans revealed in October to lay off staff and sell several airplanes in a bid to raise funds.
As per the airline's President and CEO, Ted Christie, filing for bankruptcy will give the troubled company a chance to restructure and carry on business as usual, not affecting the ability of customers to book their flights and travel; all current tickets and loyalty points will remain completely valid, he said.
"This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience, providing new enhanced travel options, greater value and increased flexibility," Christie said. "I'm extremely proud of the Spirit team's hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our guests."
As part of the bankruptcy agreement, existing bondholders will provide Spirit with a $350 million equity investment, in addition to debtor-in-possession (DIP) financing in the amount of $300 million. Amid the restructuring process, the carrier's stock shares will be cancelled and rendered completely without value, and will eventually be delisted from the New York Stock Exchange.
The company founded in 1964 as Clippert Trucking Company, changing its name to Ground Air Transfer, Inc. in 1974. In 1983 they transitioned to airline service, later changing their name to Spirit Airlines in May 1992. Currently, Spirit flies to 83 destinations throughout the United States, Central America, the Caribbean, and South America.