By Ariana Fromm
On Monday, Nov. 18, Spirit Airlines filed for bankruptcy protection. The airline has filed for Chapter 11 bankruptcy, which is a legal process that permits businesses to reorganize their debts and proceed to function while trying to find a way to pay back the money to creditors over a certain amount of time.
The airline has had trouble with debt in the past and has had a decline in income.
They tried to merge with other airlines, such as Frontier and JetBlue, earlier this year but failed.
Spirit filing for bankruptcy can cause problems for their employees and travelers looking for cheaper prices.
Due to how early it is, there is not enough information about how it will affect passengers and employees; however, some changes will be made.
Kevin Lee, a professor and chair of finance, said there will be short-term and long-term effects.
“In the short-term, there will be little to no effect on passengers and employees. Moving forward, however, expect to see the airline to consolidate some of their routes and focus on more profitable flights. This means there will be layoffs and less choice for passengers,” said Lee.
Lee said if Spirit downsizes to support themselves from bankruptcy, it can change the demand at airports.
“If Spirit must downsize, then this means less competition and therefore likely higher prices. However, macro trends, like inflation and fuel costs, might offset this,” he said.
Although their revenue has increased in the past few years, their cost for operations has increased as well. Inflation and fuel costs haven’t helped either.
“Their revenue from their fiscal year of 2021 to 2023 went from $3.2 billion to $5.36 billion. Unfortunately, their operating cost went from about $3.3 billion to $5.86 billion. So, their losses increased,” Lee said. “Looking at operating costs, we see that the major increases were in fuel costs. For Spirit, fuel costs went from $913 million to almost double $1.82 billion. Salaries and wages also increased by almost 60% from $1.06 billion to $1.616 billion,” he said.
Amey DiSisto, a senior at The University of Tampa, is from New Jersey and said she typically chooses Spirit.
“If it’s anything like visiting another long-distance college friend or going home and visiting my boyfriend or going on a trip or something, that’s something that comes out of my bank account. So I’m very cost-conscious, and I do choose the cheapest one, which more often than not is Spirit,” DiSisto said.
She said her concerns are about how seriously the company is taking it because she doesn’t know what lengths they’ll go to try and fight against the debt, like hidden fees.
“There’s already, like, a distrust with knowing that they’re bankrupt, and it makes me wonder how, what the lengths they’re going to make an extra buck before they go under will be,” DiSisto said.
Nicholas Jacobs, assistant manager at Ft. Lauderdale Spirit Airlines, said despite the bankruptcy, Spirit is devoted to their customers.
“Spirit Airlines are committed to their passengers, as they have released several media statements to assure our guests that flights will still be on time, and all credits will still be honored. The safety of the operation is of utmost importance, along with the customer service experience,” Jacobs said.
The bankruptcy hasn’t hurt the overall operations and is running normally.
“There are no changes on this front either. Upper management has assured all employees that there are no changes to health, wellness programs, or salaries,” Jacobs said.