Spirit Airlines filed for bankruptcy protection to address significant financial challenges and manage debt payments. The airline recorded losses exceeding $2.5 billion since the pandemic and faces over $1 billion in imminent debt obligations within the next year. Spirit plans to continue normal operations during its Chapter 11 bankruptcy process, allowing customers to book flights without interruption. The company experienced a 25% decline in shares amid ongoing bankruptcy discussions and reported a 97% fall in stock prices since late 2018.

Passenger numbers increased by 2% in the first half of the year, but fare revenue per mile dropped nearly 20%, exacerbating financial strain. Rising labor costs and increased competition contributed to declining profitability, alongside a surplus of flights in the leisure travel segment. Spirit is modifying its strategy by introducing bundled fares and plans to reduce its schedule by nearly 20% for the upcoming quarter. Operational issues arose from necessary repairs on Pratt & Whitney engines, resulting in grounded Airbus jets and pilot furloughs.

The airline's relatively young fleet positions it as a potential acquisition target, following previous attempts to merge with Frontier Airlines in 2022, which faced legal challenges from the Justice Department concerned about fare increases. Bankruptcy has been a recurring issue in the airline industry, with notable cases including American Airlines' emergence from Chapter 11 in December 2013.

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