By Alexandra Skores, CNN
(CNN) — If you planned on traveling aboard Spirit Airlines for the holidays, which filed for bankruptcy Monday, you shouldn’t worry.
Spirit plans to operate business as usual as it begins to work on its $3.1 billion in long-term debt, according to previous regulatory filings.
“Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal,” the airline said in a release.
Of course, that could change in the coming months. Historically, airlines or other firms that go bankrupt make major changes to try to restructure their balance sheet and return to profitability.
While this may not mean immediate impacts to travelers or fans of the airline, this could mean changes down the line to areas like its frequent flyer program and routes, says Zach Griff, senior reporter at The Points Guy.
“My take is that in the immediate short term, I wouldn’t necessarily expect too many changes,” Griff told CNN. “Thanksgiving flyers, December, Christmas flyers, I’m not as worried. I would be careful, though. I would definitely be wary about maybe booking a super future flight with Spirit, knowing that the airline is undergoing this massive transformation and restructuring process.”
Spirit said in a statement that as a result of its bankruptcy and negotiations with existing creditors it will be able to emerge from bankruptcy early next year with reduced debt and increased financial flexibility. Spirit has already cut many routes this year — 32 in September and 24 in November.
Multiple US airlines have undergone bankruptcies over the years, including United Airlines in 2002, Delta Air Lines in 2005 and American Airlines in 2011.
Spirit’s low-cost model
In recent years Spirit has attempted two mergers, one with Frontier Airlines in February 2022 and one with JetBlue Airways later in July 2022, which topped the offer from Frontier only to have its purchase blocked by a federal judge on antitrust grounds early this year.
The airline expects to emerge from bankruptcy stronger.
“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,” said Ted Christie, president and CEO of Spirit in a statement Monday.
Spirit’s low-cost airfare model was always known for low base fares, but passengers pay for carry-ons, checked bags and a seat assignment. The airline’s average roundtrip fare was $140 not including taxes, fees or ancillary revenues, according to aviation analytics firm Cirium. That number is slightly higher than competitors Frontier ($136), and Allegiant ($134) but typically far below main line carriers.
That same low fare model pushed competitors at legacy airlines to offer options for basic economy tickets, tickets that compare to Spirit’s prices but come with restrictions. Because of that competitive pressure, customers should want Spirit to survive, Griff argues.
“Spirit is this discount model airline that comes into markets and undercuts the competitors, and without that pressure, what we’ve seen historically is that the major network carriers have so much more free rein to price their tickets how they see fit, which basically raises the fares because they don’t have as much competition,” Griff said.
Travelers’ appetites for trips have also shifted in recent years with the pandemic’s restrictions, according to Sarah Foss, global head of legal at financial consultant Debtwire. She said the stigma of bankruptcy may impact Spirit going forward with travelers uncertain of its future.
For now, travelers shouldn’t stress as the airline begins to navigate bankruptcy, as it seems like a pretty standard bankruptcy filing, according to Foss.
Some travelers might feel uneasy with the looming uncertainty, she added. While they shouldn’t worry too much right now, she says, they may want to factor Spirit’s bankruptcy into decisions about future purchases or using up their miles.
“Certainly, just hearing the news of this, if you’re deciding which carrier to book your flight on, Spirit might not be your first choice if it was in the running,” Foss said.
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