Industry experts are divided about the potential impact on airfare prices after Spirit Airlines
What Happened: Analysts are weighing on Spirit's market share to determine how the airfares will go up in the face of bankruptcy, ABC News reported on Wednesday.
Some analysts argue that the airline's relatively small market share means its bankruptcy will have little effect on overall prices. They suggest that other low-cost carriers could step in to fill any void left by Spirit, thereby maintaining competitive pricing.
"Spirit isn't big enough to cause airfares to go up," said Mike Boyd, president of aviation consulting firm Boyd Group International.
Meanwhile, other analysts caution that reduced competition could lead to increased prices on certain routes. Henry Harteveldt from Atmosphere Research Group described the situation as complex, with numerous variables influencing potential pricing outcomes.
"This is not a black and white situation," he said. "It's very much a thousand shades of gray when it comes to the potential impact of Spirit's bankruptcy on pricing."
As Spirit Airlines navigates bankruptcy, the company has not announced any changes to routes or flight schedules and intends to continue normal operations throughout the bankruptcy process.
Why It Matters: The bankruptcy filing is part of a broader restructuring effort by Spirit Airlines, which includes a $350 million backstopped equity investment from existing bondholders. This move is aimed at reducing debt, enhancing financial flexibility, and supporting long-term success. Additionally, Spirit plans to equitize $795 million in funded debt as part of its restructuring strategy.
These financial maneuvers are designed to stabilize the airline and potentially improve guest travel experiences and value.
