Discount carrier Spirit Airlines, overwhelmed with continuing financial difficulty, returned to bankruptcy court in a second bid to rehabilitate its business reorganization under Chapter 11 protection from creditors, the company announced Friday.

“Today, Spirit took a proactive step to build a stronger foundation and future for our company,” the company said in a letter to customers made public Friday afternoon. “We have voluntarily entered the Chapter 11 restructuring process to ensure the long-term success of our airline.”

“The most important thing to know is that Spirit continues to operate and offer high-value travel options,” the letter added.

It also told travelers the following:

• Flights will continue to operate normally.
• Travelers can use tickets, credits and loyalty points.
• Customers may continue to benefit from the airline’s Free Spirit loyalty program, Saver$ Club perks and credit card terms.
• Its employees “remain focused on offering you a safe journey, with excellent service and an elevated experience.”

Signs that Spirit might be headed back to court arose amid reports last week that it had retained three consulting and advisory firms to counsel it about how to return to profitability and deal with increasingly aggressive competition. It also continued to retain the law firm that helped guide it through Chapter 11 the first time, when the carrier filed in late November 2024 and emerged this past spring.

The carrier filed its second petition in less than a year in U.S. Bankruptcy Court in the Southern District of New York.

“Spirit intends to use the Chapter 11 process to implement the broad changes necessary to transition the Company for a sustainable future and position it to deliver the best value in the sky for years to come,” the company said in a separate statement.

It said management “has been actively engaged with certain of its largest lessors, secured noteholders and key stakeholders over the past few months as it works to refine its path forward.”

Spirit said the second trip to court will provide Spirit “the tools, time and flexibility to continue ongoing discussions with all of its lessors, financial creditors and other parties to implement a financial and operational transformation of the Company. The Company is also working productively with its secured noteholders, including with respect to potential financing that may become necessary later in the proceedings.”

The company said employees will continue to receive their wages and benefits, and all contractors, vendors and suppliers will be paid.

For investors in Spirit stock, however, there is more bad news. As with the first Chapter 11, they will again face the cancellation of their common stock.

Unfinished business

In a broader statement announcing Friday’s action, Spirit acknowledged it had not done enough to fix its problems during the first Chapter 11 action.

“Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” said Dave Davis, the president and chief executive officer who was retained earlier this year. “After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success.”

He said the company “evaluated every corner of our business and are proceeding with a comprehensive approach in which we will be far more strategic about our fleet, markets and opportunities.”

And according to a filing Friday with the Securities and Exchange Commission, Spirit suggested its hand was forced by an aircraft lessor that claimed on Aug. 25 that the airline was in default on undelivered aircraft leases.

“The Company disagrees with the assertion that an event of default has occurred and is continuing under any Undelivered Aircraft Lease, and asserts that no such event of default has occurred or is continuing,” the carrier said. The company said it is continuing discussions with the lessor, but there is no assurance that the two sides will reach an agreement.

Spirit said if it can’t reach a deal, “it could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.”

No immediate need for cash

Nonetheless, the company appears to have sufficient operating cash at the moment.

Just last week, the carrier borrowed the entire amount of a $275 million credit line and won an extension of an agreement with its credit card processor.

Both factors appear to explain why Spirit is not immediately seeking any debtor-in-possession financing to continue flying.

In addition, the company made no mention of any pending layoffs or furloughs, although 270 pilots are scheduled to be furloughed soon and 140 captains are to be demoted as a result of a work force reduction decision made earlier this summer.

The Air Line Pilots Association, which represents Spirit’s pilots, did not immediately respond to a request for comment regarding Spirit’s newest filing for Chapter 11.

Spirit Airlines warns of ‘substantial doubt’ about its survival

Spirit filed for Chapter 11 last November, emerging from court in March with less debt, a new issue of common stock and more than $300 million in equity from major creditors.

But after the reorganization was approved, industry critics said Spirit had failed to do enough to position itself for success amid brutal industry competition that saw larger carriers such as American, Delta, Southwest and United poach business from low cost airlines such as Spirit through their use of their sheer mass and superior financial strength.

More information about the carrier’s second attempt at a financial overhaul can be found by visiting spiritrestructuring.com.