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    Why it filed for bankruptcy, what flyers should know

    Online Niel Posted on

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    If you are a Spirit Airlines fan, you might want to look for a new airline after the company filed for bankruptcy protection on Monday.

    The airline listed its estimated assets and liabilities in the range of $1 billion to $10 billion each, according to a court filing on Monday.

    Spirit has previously announced pilot layoffs and capacity cuts to address ongoing financial problems as well as well-documented engine problems that have grounded many of the airline’s Airbus A320s. Spirit flies exclusively A320 family aircraft, so it was hit hard by these failures and was already limiting capacity as a result.

    Here’s what you need to know:

    Why did Spirit Airlines file for bankruptcy?

    Spirit Airlines, after struggling with a long streak of quarterly losses, failed merger attempts and looming debt maturities.

    Spirit’s woes deepened after the collapse of its planned $3.8 billion merger with JetBlue Airways in January and the impact of RTX, Pratt & Whitney Geared Turbofan engines that grounded many of its aircraft.

    Spirit has entered into an agreement with its bondholders that will reduce total debt and provide increased financial flexibility.

    The airline, as part of Chapter 11 bankruptcy protection, received a commitment for a $350 million capital investment from existing bondholders.

    Existing bondholders will also provide $300 million in debtor-in-possession (DIP) financing, which, along with available cash, is expected to support the airline through its Chapter 11 process.

    Spirit expects to be delisted New York Stock Exchange short term.

    Can I fly Spirit in the middle of bankruptcy?

    Spirit said it expects to continue flight operations during the proceedings, and customers can book and fly without interruption. Passengers should not immediately worry too much about their travel plans or frequent flyer miles.

    “In the short term, it’s only going to be smaller,” Robert W. Mann Jr., a former airline executive and current chairman of RW Mann and Co., an independent airline consulting firm, told USA TODAY. “If you’ve already received notification that your flight was canceled or had to be rebooked, you’ve already received notification.”

    What happens to Spirit flights already booked?

    Most, if not all, flights should be operating as scheduled in the short term.

    Mann said Thanksgiving travel is unlikely to be affected, but there may be schedule changes and cancellations later in the winter.

    “It’s very possible that by 45 days, which is kind of the end of the year, we’ll have other changes,” Mann said.

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    Travelers with existing Spirit reservations should watch for notifications of any changes to their itinerary from Spirit as the departure date approaches.

    “Their best notification will be the notification they receive from the carrier, such as time changes or rebooking or inability to rebook, cancellations. Then, of course, they are subject to the new (Department for Transport) rules about how passengers must be treated. , so understanding that is probably an important thing,” Mann said.

    The Department of Transportation recently finalized guidelines requiring airlines to provide passengers with a full refund if their flight is canceled or delayed for more than three hours on a domestic itinerary or six hours on an international itinerary for any reason. Travelers are only eligible for refunds if they choose not to travel on the delayed flight or on an alternative itinerary offered by the airline.

    Can I transfer my Spirit miles/loyalty points to another airline?

    Airline loyalty points or miles are generally not transferable, but Mann said frequent flyer programs are valuable assets that often survive bankruptcies.

    “That’s an asset, at least from the point of view of people who might purchase them. You also acquire a customer base,” he said. “In fact, this could be a source of funding in the future.”

    It is also possible that Spirit will emerge from bankruptcy through a merger. Many industry observers anticipate that the incoming Trump administration will be friendlier to airlines joining forces than the Biden administration was. Under Biden, a proposed merger between Spirit and JetBlue was scrapped, and Frontier Airlines recently backed out of an attempt to combine with its ultra-low-cost yellow rival, as first reported by The Wall Street Journal. Those deals could be revived or another potential buyer could step in in a different regulatory environment.

    If Spirit merges with another airline, it is likely that the frequent flyer program will be part of the package and combined with that of the other carrier.

    Who holds the planes of the Spirit?

    It depends.

    Spirit does not already own all its planes. For the portion of its fleet that is leased, the lessor will retain ownership and be free to re-lease to Spirit or another airline, depending on available offers.

    The planes Spirit owns could be sold to raise cash during the bankruptcy, but the airline may choose to sell other assets, such as gates and airport slots, if its managers believe the planes are more likely to generate revenue by remaining in service.

    Does Spirit Airlines fly out of Kentucky?

    Yes and no. Spirit is one of the airlines flying from Louisville Muhammad Ali International Airportbut it doesn’t fly from Cincinnati/Northern Kentucky International Airport, according to the list of airlines.

    Credit: Reuters

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