Spirit Airlines, the pioneer in no-frills US travel, filed for bankruptcy on Monday after a long period of quarterly losses and significant amounts of debt. The airline’s woes deepened after the collapse of its USD 3.8 billion planned merger with JetBlue Airways in January and the impact of RTX’s Pratt & Whitney Geared Turbofan (GTF) engines snag that has grounded many of its aircraft.
Spirit, known for its bright yellow livery and struggling with inflated costs, was losing money despite a strong travel demand. The airline said that it has reached an agreement with bondholders which is expected to reduce the total debt and increase financial flexibility.
Spirit began in 1964 as a long distance trucking firm before moving into aviation around 1983. Charter One Airlines offered leisure packages for popular destinations, and in 1992 it changed its name to Spirit. Discount carriers became popular among budget-conscious customers who were willing to sacrifice amenities such as checked bags and assigned seats.
Sunday, India set a new domestic air travel record. Over 5 lakh people flew for the first time. The surge in demand can be attributed to the festive season and wedding season. Over 3,000 flights were operated by the airlines to meet demand. Flight occupancy rates increased above 90 percent. This led to a slight drop in the on-time performance of some airlines.
Since the pandemic, ultra-low-cost airlines, which excelled in keeping their costs low and offering affordable travel with no frills, have struggled as travelers prefer to spend more for a comfortable journey while they pursue experiences. Spirit’s problems, along with those of some of its budget rivals, have prompted Wall Street analysts to talk about a flawed business plan.
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