Spirit Airlines to reduce flights to emerge from bankruptcy

Spirit Airlines is preparing to shrink to a tiny version of itself, focusing on high-demand travel times and routes, as well as increasing premium class seats to try to survive, according to a new plan unveiled Tuesday in U.S. Bankruptcy Court.

The airline will largely focus on flying to destinations from its main airports in Florida, Fort Lauderdale and Orlando, as well as from the New York area and Detroit, CEO Dave Davis told CNBC.

Flights that don’t hit those airports “will be an even smaller part of the network,” Davis said.

He declined to specify which routes might be cut, but noted strong competition on transnational flights, as well as some weakness in demand for visiting friends and relatives, a key segment of air travel, in Latin America. He said some flights in Latin America would likely be reduced, but the region would remain important to Spirit.

The airline will also focus more on peak days and reduce loss-making flights on Tuesdays and Wednesdays, Davis said.

The budget travel icon has announced it will shed even more of its Airbus fleet as it plans to emerge from its second bankruptcy in less than a year. It is expected to emerge in late spring or early summer, Spirit’s attorney, Marshall Huebner of Davis Polk, said at a hearing Tuesday.

Spirit said the changes would make the airline leaner and more competitive.

The company said that as part of the plan, it believes it has reduced costs and that its debt and lease obligations will be reduced from $7.4 billion to $2.1 billion following this bankruptcy.

Spirit has reached an agreement in principle with its creditors for the plan, Huebner said, adding that the secured lenders will make “significant additional liquidity available to Spirit via the release of cash collateral.”

Spirit will rework its network and schedules to increase aircraft utilization during periods of high demand and on popular routes and to reduce utilization during travel lulls. The carrier also plans to expand its Spirit First and Premium Economy offerings, as well as update its loyalty program.

Davis told CNBC that the airline plans to roll out premium economy seats throughout its fleet and is considering adding a third row of its premium cabin product, the so-called “Big Front Seat.”

The new fleet would be comprised primarily of older Airbus aircraft, “with the potential rejection of additional high-cost NEO aircraft,” Huebner said, referring to the more modern Airbus A320 family of aircraft, adding that the exact size of Spirit’s fleet will depend on discussions with peers such as aircraft lessors.

He said Spirit’s annualized fleet cost would be reduced by an additional $550 million, a 65% drop from its bankruptcy filing last year. Debtors are also looking at an additional $300 million in savings through non-fleet cuts, he said.

Spirit has already reduced part of its Airbus fleet and furloughed pilots and flight attendants to cut costs while shrinking its network, although some cabin crew were called back to work ahead of spring break.

Davis acknowledged that attrition has reduced some staffing levels and said it’s too early to say whether the carrier will have to reduce its workforce to meet its new fleet footprint.

During its second bankruptcy, Spirit had negotiated with Border Airlinesand with investment company Castlelake. Nothing came to fruition, but Huebner hinted that a combination could be back on the table.

“This emergence will allow Spirit to do many things from a position of strength and stability, including considering possible future industry transactions,” Huebner said.

Davis said increased consolidation of low-cost airlines “makes sense” but added that “if we build a sustainably profitable entity here, we will have many options in front of us.”

The path of the Spirit will be difficult. That would pit a smaller version of Spirit against increasingly larger competitors that dominate the U.S. market.

Some U.S. low-cost carriers have struggled due to, among other things, an increase in labor and other costs post-Covid as well as a growing consumer shift toward more premium travel.

“Because every day counts, and every dollar counts, the airline industry is just as competitive today with this deal in hand as it was last Friday, and we must — and we will — lock down what we need from other stakeholders, then begin a warp march to get this storied company out of Chapter 11 as soon as possible so it can write its next chapters from a position of strength,” Huebner said.

Spirit was particularly challenged by a massive recall of engines from Pratt & Whitney and a failed plan to be acquired by JetBlue Airwaysan agreement rejected by a federal judge in early 2024.

Spirit projected it would generate net income of $252 million last year, according to a court filing in December 2024. But it said in an August report that it lost nearly $257 million in a few months, starting March 13, after exiting its first Chapter 11 bankruptcy, through the end of June. Less than a month later, she filed for Chapter 11 bankruptcy again.

Another challenge for Spirit is that major US airlines like American airlines, Delta AirlinesAnd United Airlines have launched their own no-frills basic economy fares that more closely resemble Spirit’s model, although they are attached to larger carriers.

Davis said Spirit still plays “an extremely important role” in the industry, even though some competitors have prepared for the airline to scale back, or even cease operations altogether, by adding flights on routes abandoned by Spirit.

“The reason the fares are low, the reason the base economy fares are low at our legacy competitors is because airlines like us exist,” he said. “If we didn’t exist, the rates … would be considerably higher than they are now, I can guarantee you that.”