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Investing.com -- Spirit Airlines (NYSE:SAVE) stock plummeted 45% after the ultra-low-cost carrier filed for Chapter 11 bankruptcy protection to restructure its operations and address mounting financial challenges.
The airline announced it has filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York as part of a "comprehensive restructuring" aimed at positioning the business for long-term success.
Spirit intends to use the bankruptcy process to implement broad changes to its business model, including redesigning its network to focus on key markets, optimizing its fleet size, and addressing its cost structure. The company has been engaged with its largest lessors, secured noteholders, and other stakeholders over recent months to refine its path forward.
"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, President and Chief Executive Officer.
The airline assured customers they can continue to book and travel as normal during the restructuring process. Tickets, credits, and loyalty points will remain valid, and the company plans to maintain wages and benefits for employees.
As part of its restructuring strategy, Spirit will focus on profitable markets while reducing its presence in others. The company also plans to rightsize its fleet to match capacity with demand, which it projects will generate "hundreds of millions of dollars in annual operating savings."
Spirit expects to be delisted from the NYSE American Stock Exchange in the near term, with its shares continuing to trade over-the-counter during the bankruptcy process. The company anticipates its common stock will ultimately be cancelled and have no value as part of the restructuring.
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