Spirit Airlines has been through several problems in the past few years. The most recent one is that it acknowledged in an SEC filing that it may not be able to stay in business. The company’s 10-Q referred to “going concern” several times, which is an indication that it may soon not be able to operate.
24/7 Wall St. Key Points:
Spirit Airlines has acknowledged that it may not be able to stay in business.
The budget airline may face liquidation instead of another bankruptcy.
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The problems that triggered this are not new. The company filed for Chapter 11 bankruptcy last November. It has faced weak demand for leisure travel this year, which has forced it to lower ticket prices. It also has liquidity requirements set since emerging from bankruptcy.
Given the magnitude of these problems, Spirit may even face liquidation instead of another bankruptcy.
On the announcement, shares of parent company Spirit Aviation Holdings Inc. (NYSE: FLYY) plunged 40% to $2.10, and they are likely to drop again today.
Often, budget airlines do poorly in polls about customer satisfaction, which may be a reason people turn to other carriers. Spirit has ranked at or near the bottom in recent surveys from research firms J.D. Power and the American Customer Satisfaction Index. It also received a rating of 1.4 out of 5.0 in a Better Business Bureau survey. Among the reasons for the rankings is that Spirit charges extra fees for baggage and seat selection.
Spirit may not be missed. It ranks eighth out of nine carriers based on size. It began operations in 1992.
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