ALPA Urges Bondholders to Back Spirit Airlines’ Chapter 11 Exit

The Air Line Pilots Association is urging bondholders to provide additional financial support to Spirit Airlines, warning that the carrier risks liquidation if it cannot secure enough funding to successfully exit Chapter 11 bankruptcy. The appeal underscores growing concern over the future of the ultra-low-cost airline as restructuring efforts continue under tight financial pressure.

Air Line Pilots Association said further investment from creditors is essential to preserve Spirit as a going concern. The union, which represents Spirit’s pilots, argued that liquidation would harm not only employees but also passengers, airports and competition within the U.S. airline industry. ALPA said a disorderly collapse would eliminate thousands of jobs and reduce consumer choice in an already consolidating market.

Spirit Airlines filed for Chapter 11 protection as it sought to restructure its balance sheet after years of financial strain. The airline has struggled to recover from the pandemic-era collapse in travel demand and has faced rising costs, operational disruptions and weaker-than-expected revenue in the post-pandemic environment. Efforts to stabilize the business have included deep cuts across its operations.

As part of its restructuring, Spirit has reduced its fleet size, trimmed its workforce and scaled back its route network. Aircraft deliveries have been deferred, underperforming routes eliminated and staffing levels adjusted to conserve cash. While these measures have lowered expenses, they have also reduced Spirit’s growth prospects and revenue base, increasing the importance of new financing to fund operations during and after bankruptcy.

ALPA warned that without additional capital from bondholders, Spirit may be unable to complete its restructuring plan. The union emphasized that pilots and other employees have already made sacrifices and that further cuts alone will not solve the airline’s financial challenges. Instead, ALPA said creditors must decide whether to support a reorganized Spirit or risk losing value in a liquidation scenario.

Bondholders face a difficult calculation. Providing new funding could improve Spirit’s chances of survival and eventual recovery, but it also exposes creditors to continued risk in a highly competitive low-cost market. However, ALPA argued that liquidation would likely result in even greater losses for bondholders, as aircraft values, airport slots and other assets could fetch less in a forced sale.

The union also highlighted Spirit’s role in maintaining fare competition, particularly in leisure-heavy markets. Removing the airline from the market, ALPA said, could lead to higher fares and reduced service on many routes, affecting consumers and local economies.

Spirit continues to operate flights normally during the bankruptcy process, but uncertainty remains over its long-term future. ALPA’s message to bondholders is clear: additional support could give Spirit a viable path forward, while inaction could push the airline toward an irreversible outcome.

Related News: https://airguide.info/category/air-travel-business/airline-finance/

Sources: AirGuide Business airguide.info, bing.com