WASHINGTON (NEXSTAR) – Spirit Airlines announced it would file for bankruptcy protection on Monday, marking the first major airline in the U.S. to do so in more than a decade.
The airline has lost more than $2.5 billion since the beginning of 2020 and hasn’t been profitable since the end of the pandemic.
“From a customer’s perspective, now it’s time for revenge,” said George Washington University Professor Jungho Suh.
Suh said the post-pandemic “revenge” travelers are willing to spend money for a better product, leading to challenges for low-cost carriers like Spirit.
The Points Guy Founder, Brian Kelly, said Spirit started trying to cater to premium travelers.
“Their model is very barebones, but they’re working in a premium world,” Kelly said.
Adding to the challenges for Spirit, last year, the Department of Justice sued to block a merger between Spirit and JetBlue, worried it would reduce competition. Transportation Secretary Pete Buttigieg, at the time said in a tweet, “competition supports better consumer choice and lower airfares”.
“If you have a situation where you block a merger and then one of the airlines goes bankrupt, the people have fewer options, then perhaps that does present a case that this wasn’t in the interest of consumers,” said Rep. Kevin Kiley (D-Calif.).
In a letter to fliers, Spirit Airlines’ CEO said tickets, credits and loyalty points will all run normally. He said Spirit wants to continue operating while it restructures by early next year.
Spirit’s stock, which is down 97% since 2018, will be delisted from the New York Stock Exchange soon, the airline said.
“The shares are expected to be cancelled and have no value as part of Spirit’s restructuring,” the Spirit’s website said.
The Air Line Pilots Association said it’s working to make sure the bankruptcy has minimal impact to its members.
