US budget carrier Spirit Airlines insists that flights are expected to continue operating despite filing for bankruptcy protection.
Flights, ticket sales, bookings and all other operations are continuing as normal, a statement said.
The financial restructuring under the US bankruptcy regulations, which have been used by other airlines in the past, is expected to be competed in there first quarter off 2025.
Spirit aims to emerge “even better positioned to deliver the best value in the sky”.
Other airlines that are operating successfully today have undertaken a similar process, the airline noted in an announcement to passengers.
Spirit reported a net loss of $193 million in its second quarter financial results in August in the face of “significant” industry capacity increases, leading to “disappointing”: revenue results.
The airline saw a $3.8 billion merger with low cost rival JetBlue collapse earlier this year after a Massachusetts judge blocked the deal, arguing that the deal would reduce competition in the market.
Announcing the Chapter 11 filing, the Florida-based airline said: “The restructuring is expected to reduce Spirit’s debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing guests with enhanced travel experiences and greater value.”
Spirit expects to be delisted from the New York Stock Exchange in the “near term” as a result.
The airline said it had received commitment for a $350 million equity investment from existing shareholders in addition to $300 million in “debtor-in-possession” financing and a $795 debt to equity arrangement “which, together with Spirit’s available cash reserves and cash provided by operations, is expected to further support the company through the chapter 11 process”.
Spirit added: “The challenges facing the airline industry as a whole, including rising operational costs, changing consumer preferences and fluctuating demand, have not subsided over the last few months.
“We have aggressively moved to adapt our business to respond to these challenges, and over the past several months we have been implementing a comprehensive transformation plan to help us better compete, materially strengthen our balance sheet, and return to profitability.
“To support the continued momentum for our long-term transformation, we’ve been engaged in ongoing discussions with our bondholders to explore options to optimise our capital structure and enhance our liquidity.
“This agreement with our bondholders represents a critical milestone in the ongoing process to transform our business, strengthen our capital structure and best position Spirit for the future.
“We expect to continue operating our business in the normal course throughout the prearranged, streamlined chapter 11 process.”
President and chief executive Ted Christie said: “I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalisation of the company, which is a strong vote of confidence in Spirit and our long-term plan.
“This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience, providing new enhanced travel options, greater value and increased flexibility.
“I’m extremely proud of the Spirit team’s hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our guests.”