Dive Brief:
- Spirit Airlines is working to reassure customers as it filed for Chapter 11 bankruptcy Monday in a move meant to position the airline for long-term success.
- In a letter to customers, Spirit said that business would continue as usual. Customers can continue to book and fly Spirit, use and earn loyalty points, and expect “excellent service and an elevated experience” from Spirit staff, the airline said.
- The airline said the bankruptcy proceedings will allow it to accelerate investments in customer experience. "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,” Ted Christie, Spirit's president and CEO, said in a statement.
Dive Insight:
The budget airline has faced a series of headwinds in recent years, from failed mergers with Frontier and Jet Blue to changing consumer preferences and mounting debt, leading it to declare bankruptcy.
“Spirit is facing quite a few challenges right now,” Sean Cudahy, aviation reporter at The Points Guy, told CX Dive. “For one thing, airlines took on a lot of debt during the pandemic. Spirit has billions of dollars in debt, more than a billion of which is coming due here soon.”
Customers are also looking for premium travel experiences — something that the low-cost, no-frills airline is not known for.
“A lot of customers are flocking toward the larger carriers that have those premium products to offer," Cudahy said. "We've seen a lot of success out of Delta and United, less so from carriers at the budget end of the spectrum. That's obviously been to Spirit’s detriment.”
To address its balance sheet and changing consumer preferences, the airline has cut routes and changed how it presents tickets and bundles.
“They've repackaged their big front seat product into kind of a pseudo business class fare,” Cudahy said. “They ditch change and cancellation fees, really trying to kind of mimic more closely some of the larger airlines that have had more success of late, but at the end of the day, they're just in a financial hole.”
The bankruptcy filing comes right before the Thanksgiving holiday, but Spirit customers shouldn’t see any chances to their holiday plans. Time will tell how the bankruptcy proceedings will impact customers long term.
“Chapter 11 is a reorganization, restructuring,” Cudahy said. “And in the past, we've seen airlines emerge kind of leaner, but stronger financially on the other side.”
