How Massive Debt, Stiff Competition Dashed Spirit Airlines

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Spirit Airlines Inc. is trying to reorganize and make a comeback, but it will likely look more like its bigger competitors than its former self.

Spirit Airlinesโ€™ financial failure could mean fewer options and higher ticket prices for Americans flying on a tight budget.

On Nov. 18, the Dania Beach, Florida-based ultra-low-cost carrier famous for its cheap base fares, announced it was seeking Chapter 11 bankruptcy protection.

Spirit is currently attempting a reorganization in bankruptcy court so it can pay back its creditors and return to business. Ahead of its Chapter 11 filing, the company had already announced a new vision designed to make the airline more like Americaโ€™s other low-cost carriers.

Spirit Airlines spokeswoman Nicole Aguiar told The Epoch Times via email that the airline will continue to operate as usual during its restructuring process.

Still, others in the industryโ€”notably United Airlines Holdings Inc. CEO J. Scott Kirbyโ€”say the reorganization process is merely a milestone on the road to Chapter 7 liquidation.

โ€œI think the current business plan is not going to work,โ€ Kirby told reporters in early December. โ€œChapter 11 will be a brief pit stop on the way to Chapter 7.โ€

Whether the company can keep flying is yet to be determined, but it seems inevitable that Spiritโ€™s ultra-low-cost version will fade into memory. If Spirit disappears completely or abandons its ultra-low-cost business model, its pricing pressure, which forces competing carriers to lower their prices, may disappear forever.

A Perfect Storm

Ryan Ewing, a longtime industry observer and the editor of airline trade publication AirlineGeeks, told The Epoch Times that Spirit found itself in a tempest created by competition from other airlines, a rapidly increasing cost of doing business, a massive shift in airline demand that began during the COVID-19 pandemic of 2020, and finally, a failed acquisition by JetBlue Airways Corp.

Ewing said that Spirit, founded in 1992, was profitable for much of its existence, despite consumer criticism of its business practices. In May, consumer insights firm J.D. Power ranked Spirit as the second-worst economy or basic economy airline in terms of consumer satisfaction. Only its ultra-low-cost rival Frontier Airlines fared worse.

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