US-based Spirit Airlines has reportedly reached agreements in principle with the associations that represent the carrier’s pilots and cabin crew members, with regard to pay cuts, as the airline goes through its Chapter 11 restructuring process, to be more financially secure.
Having entered Chapter 11 Bankruptcy Protection earlier in the year, the carrier has been making several changes to its organizational structure and operations to reduce costs and achieve a leaner and more efficient operation during its restructuring phase.
Agreement In Principle With ALPA And AFA
American carrier, Spirit Airlines, in a press release on Friday, stated that the carrier has reached agreements in principle with its pilots and cabin crew members, who are represented by the Air Line Pilots Association (ALPA) and Association of Flight Attendants (AFA), respectively, regarding salary reduction as the carrier navigates through its ongoing Chapter 11 restructuring process. The carrier states that this is a vital step to reposition the airline for its future.
The press release also read that the airline’s senior leadership members have also committed to reducing their salaries at a percentage not less than the reduction the airline’s pilots will see. While these proposed changes are subject to definitive documentation, ratification, and approvals, the airline estimates that the related annual cost savings from these steps will help achieve the targets that would enable Spirit’s next draw under its debtor-in-possession financing.
The airline’s President and CEO, Dave Davis, stated,
“These agreements reflect the shared commitment of our Team Members and principal labor unions in securing a successful future for Spirit, and we thank ALPA and AFA leadership for their partnership and collaboration.”
Significant Restructuring In Spirit’s Operations
Having recorded a loss of over $800 million, and the carrier entering Chapter 11 Bankruptcy protection for a second time a few months ago, Spirit has been making significant changes to the airline’s operational structure, but also its corporate structure. According to Reuters, the airline has so far cut off around 150 salaried positions and is planning to cease services at five airports, which includes:
|
Airport (Code) |
Phoenix (PHX) |
Milwaukee (MKE) |
St. Louis (STL) |
Rochester (ROC) |
Bucaramanga (BGA) |
|---|---|---|---|---|---|
|
Country |
USA |
Colombia |
|||
Overall, the carrier operates 15 routes from these airports, and the airline plans to pull out of PHX, STL, and ROC on January 8, 2026, while MKE and BGA will see the airline exit later on January 13, 2026. The carrier has also been furloughing several of its pilots and cabin crew members in recent months as the airline tries to reduce its costs. Additionally, the carrier’s fleet has significantly reduced in recent months, and the airline aims to slim down its fleet further.
Earlier reports from Bloomberg state that, since entering Chapter 11, Spirit has signed a deal with the Irish aircraft lessor, AerCap, to return aircraft not being operated, while also reducing the order size it previously placed for new aircraft, in order to raise some capital.
What Is Chapter 11 Bankruptcy?
Within the context of the Aviation industry, it is a tool that allows airlines struggling with financial issues, restructure themselves while remaining operational, and having access to several other advantages, including funding, which gives the carrier some breathing room, and reorganize itself to a favorable position.
Key advantages include the aforementioned Debtor-in-Possession financing, which provides carriers navigating Chapter 11 with immediate liquidity to continue operations while the airline undergoes restructuring, or the Automatic Stay Provision, which prevents activities such as debt collections and lawsuits against the airline in Chapter 11, which allows the carrier to develop a reorganization plan without facing the threat of losing assets.
Such provisions have allowed carriers in the past to restructure their operations and re-emerge from Chapter 11 with profitable operations. In recent times, this has included carriers such as Avianca, Philippine Airlines, Thai Airways, and more. In the case of Spirit, it will be interesting to see how the airline reorganizes itself this time. The carrier has gone through restructuring under Chapter 11 previously, and only time will tell the carrier’s outcome this time.
