Spirit bankruptcy: How it will affect Detroit Metro Airport

DETROIT (FOX 2) – Spirit Airlines filed for Chapter 11 bankruptcy protection Monday amid mounting losses and debt — and two failed mergers.

Spirit announced it was filing for Chapter 11 bankruptcy just days after a deal with Frontier Airlines fell apart. Earlier this year, Spirit had been in talks to merge with JetBlue — a deal that never materialized.

In October, Spirit announced plans to sell more planes and lay off workers as it tried to raise cash and revive operations.

President and CEO Ted Christie said Monday that the airline has reached an agreement with its bondholders that is expected to reduce the company’s total debt and provide increased financial flexibility.

“This set of transactions will significantly strengthen our balance sheet and position Spirit for the future as we continue to execute on our strategic initiatives to transform our guest experience and provide new enhanced travel options, greater value and increased flexibility,” Christie said in a press release. . “I am extremely proud of the Spirit team’s hard work and dedication, which is key to our continued progress in advancing our business and delivering to our guests.”

Detroit is one of Spirit’s largest hubs with flights to 20 destinations including Atlanta, Cancun, Dallas, Las Vegas and more.

How Will Spirit Airlines’ Bankruptcy Affect Vacation Travel?

The good news is that if you’ve booked tickets – you should be fine.

The bankruptcy filing comes just weeks before the busy holiday travel season — with up to 6 million people expected to fly commercial airlines over the Thanksgiving weekend. But the bankruptcy is unlikely to affect those flights.

Most flights will operate as scheduled in the short term. But that doesn’t mean you’re guaranteed to be safe.

Will Spirit’s bankruptcy cause flight cancellations?

Nerdwallet delved into the questions that fliers might need to know, and the answer to this question is – maybe.

If you have booked a flight, keep an eye out for times and details.

An airline filing for bankruptcy does not mean your flight is cancelled. Under Chapter 11 bankruptcy rules (which we describe below), Spirit is able to restructure debt payments and is allowed to continue operating while reducing costs—which could ultimately lead to fewer routes.

If you have a ticket and your flight is canceled, call Spirit to find out a refund as soon as possible.

What is Chapter 11 bankruptcy?

The term bankruptcy tends to indicate that a business is closed. But this is not the board game Monopoly – declaring such bankruptcy does not end a business. According to uscourts.gov, companies will keep their assets when filing for Chapter 11.

Instead, a declaration of bankruptcy protects the company from debt while allowing the organization to restructure the debt and make plans to climb out. That is why according to Lending TreeChapter 11 is often called restructuring bankruptcy – it gives the company a chance to restructure.

Chapter 11 bankruptcy does not define what happens to debts. Filing for Chapter 11 helps businesses keep their assets and resolve debt problems. It can also help prevent the sale or liquidation of the business.

During the Chapter 11 case, the company, now referred to as a ‘debtor in possession’, typically retains control of its assets and continues to operate under the supervision of the court.