(Bloomberg) -- Spirit Airlines Inc. has filed for bankruptcy in the wake of greater competition from rival carriers and financial troubles following its scuttled merger with JetBlue Airways Corp.
The airline filed for Chapter 11 in New York listing assets and liabilities of between $1 billion and $10 billion, according to a court document.
Spirit has been in negotiations with its creditors since a federal judge blocked that $3.8 billion acquisition by JetBlue, ruling the combination would harm cost-conscious travelers by driving up the price of airline tickets across the industry. The federal government had challenged the tie-up on antitrust grounds. Separate talks for a merger with Frontier Group Holdings Inc. also fell apart.
The airline has also been under increased pressure from larger carriers that have offered travelers more affordable tickets.
Spirit filed for bankruptcy after reaching an agreement on a broad debt restructuring with a majority of its loyalty and convertible bondholders, according to a statement.
Under the plan, existing bondholders will take control of the company, which will be delisted, after swapping $795 million of debt into equity. Bondholders have also committed to inject $350 million of fresh equity and provide $300 million of debtor-in-possession financing to support it throughout the Chapter 11 process, the company said in the statement.
The airline has struggled following the Covid-19 pandemic. Larger US carriers have increasingly used basic economy fares to lure travelers away from Spirit. The company has posted annual losses since 2020 and its stock has plummeted 93% this year through Nov. 15.
The discount carrier in recent months announced it would begin offering items like extra leg room and free checked bags in response to growing consumer demand for more upscale travel options. Spirit follows into bankruptcy budget Brazilian airline Gol Linhas Aereas Inteligentes SA, which in January filed for Chapter 11 in New York.
The case is Spirit Airlines Inc., 24-11988, US Bankruptcy Court, Southern District of New York (Manhattan).
--With assistance from Luca Casiraghi, Dayana Mustak and Irene García Pérez.
(Updates with details of restructuring plan and context from fifth paragraph. An earlier version corrected the currency in second paragraph.)
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