After all the speculation about the future of Spirit Airlines (SAVE) when it filed for bankruptcy protection in November, the low-cost airline rejected a merger with peer low-cost carrier Frontier (FRON) and eventually determined to go private.
On Feb. 20 a judge in U.S. Bankruptcy Court for the Southern District of New York approved Spirit’s plan to convert $795 million of debt into equity and hand control to a group of the airline’s biggest bondholders.
And on March 12 Spirit Air Chief Executive Ted Christie sent customers a note saying that the airline had officially completed the restructuring process and emerged from bankruptcy proceedings.
Related: Spirit is going private (here is what you need to know)
Spirit promises ‘high-value travel options’
“Today, we’re moving forward with our strategy to redefine low-fare travel with our new, high-value travel options,” Christie told investors. The letter called it an “exciting day for Spirit” and the “next phase of our journey.”
The nod to “high-value travel options” refers to the carrier’s July 2024 move to replace its decades-old base-fare model by one with bundles.
The previous business model focused on luring discount-seeking travelers and standing out from competitors with rock-bottom fares.
In the new model the most expensive Go Big fare comes as close to business class as is possible on a budget airline running short flights.
This bundle includes priority check-in and boarding, a large armchair-style seat with extra legroom at the front of the plane, and free snacks and alcohol during the flight.
TheStreet’s Veronika Bondarenko tested the Go Big Spirit fare on a flight to Chicago.
Veronika Bondarenko
Spirit aims to attract wealthier travelers
Now, multiple signs point to Spirit looking to attract more affluent travelers. That’s inherently an uphill battle given that its core traveler base is focused on affordability while budget airlines also lack the resources to provide the kind of high-end experience that wealthy customers expect and the major carriers can provide.
Opposite the high-end Go Big package, Spirit now offers the basic-fare Go model. In between are Spirit’s Go Comfy, which gives customers a blocked-off middle seat, and Go Savvy, which comes with seat selection, a checked bag and no change or cancellation fees.
“They seem to have forgotten who they are,” Gary Leff wrote for the aviation website View From The Wing in August 2024.
“This isn’t a first class airline, it’s cheap transportation. They make travel affordable. They are a leisure airline for once a year flyers. That’s what gave them the highest margins in the industry before the pandemic.”
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Along with the debt-to-equity conversion, Spirit is also receiving a new $350 million equity investment as well as issuing $840 million of new senior secured debt to bondholders.
The main bondholders include investment firms like Citadel Advisors, Pacific Investment Management and Western Asset Management.
The airline confirmed that investors approved Christie continuing to lead the company.
“Throughout this process, we’ve continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success,” he told investors.
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