The Points Guy founder Brian Kelly discusses how Spirit Airlines’ bankruptcy could impact travel.
While Spirit Airlines filed for Chapter 11 bankruptcy protection, the carrier stated that passengers would still be able to travel as usual. But industry experts warn that the airlines’ financial challenges have already affected operations and will continue to do so.
In an open letter to travelers on Monday, the budget airline said it has entered into an agreement with bondholders to reduce its total debt, provide increased financial flexibility and position it “for long-term success.”
The company expects to complete bankruptcy proceedings in the first three months of 2025. During this process, the budget carrier said it expects to “continue operating its business in the normal course.”
SPIRIT AIRLINES FILES FOR CHAPTER 11 BANKRUPTCY PROTECTION
Here’s what the airlines told travelers:
In its statement on Monday, Spirit said guests will still be able to book and fly “without interruption.” This means travelers will still be able to use all of their tickets, credits and loyalty points, according to the airline. The carrier also said customers can still utilize the company’s Free Spirit loyalty program, Saver$ Club perks and credit card terms.
The company also hinted that this process won’t hinder holiday travel, either.
“We’re grateful you continue to choose Spirit for your travel needs. As we head into the holiday season and beyond, we look forward to welcoming you on board again soon,” the company said.
Travelers check-in at the Spirit Airlines counter at Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida, on Oct. 24, 2023. (Eva Marie Uzcategui/Bloomberg via Getty Images / Getty Images)
The Points Guy founder Brian Kelly said filing for bankruptcy doesn’t mean the company is “closing up shop,” a message he believes Spirit is trying to convey to its customers.
“They need consumers to be confident in the airline,” Kelly told FOX Business. “They’re already struggling as it is today, so if people start booking on other carriers, that’s going to spell even more trouble for the airline. And they clearly want to survive this process.”
JETBLUE, SPIRIT AGREE TO TERMINATE MERGER OVER REGULATORY ISSUES
Despite the airlines’ reassurances, Kelly believes that travelers will inevitably feel the impact.
He pointed to the fact that Spirit has already cut back on different routes, announced plans to furlough pilots and sell aircraft.
Spirit Airlines expects to complete bankruptcy proceedings in the first three months of 2025. (iStock / iStock)
In a Securities and Exchange Commission filing last month, the ultra-low-cost carrier said it identified approximately $80 million in annualized cost reductions that it plans to implement next year.
This won’t necessarily impact holiday travel, but it could impact future 2025 travel plans, according to Kelly.
“What that means for the traveler is if you booked far out on Spirit, there’s a very good chance your flight time may get drastically changed or your flight canceled altogether,” he said.
Due to the Department of Transportation‘s recently enacted automatic refund rule, which defines the circumstances under which airlines must issue refunds, passengers are entitled to compensation in the event of cancellations, Kelly said.
But he cautioned that the disruption could still cause significant headaches, “especially if the cancellation happens closer to departure when all the alternate options are much more expensive.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Kelly said that Spirit’s survival is vital, saying it is critical for the health of the travel ecosystem.
“Whether you love or hate Spirit, they are good for the travel ecosystem and in keeping fares relatively low today,” Kelly said, adding that fares today, when adjusted for inflation, are actually cheaper than in 2019.
“It’s because of carriers like Spirit,” he said.
