Spirit Airlines has formally filed for bankruptcy protection following a prolonged period of financial difficulties characterized by continuous quarterly losses, unsuccessful attempts at merging with other airlines, and upcoming debt obligations.

The situation worsened for Spirit after the failure of its proposed $3.8 billion merger with JetBlue Airways in January, coupled with issues related to RTX’s Pratt & Whitney Geared Turbofan engines, which grounded many of Spirit’s aircraft.

According to a court filing made on Monday, the airline has reported that its assets and liabilities are each estimated between $1 billion and $10 billion.

Spirit has reached an agreement with its bondholders that aims to decrease its overall debt and enhance its financial stability.

As part of a prearranged Chapter 11 bankruptcy plan, the airline has secured a commitment for a $350 million investment from its current bondholders.

Additionally, existing bondholders are providing $300 million in debtor-in-possession (DIP) financing, which along with its available cash, is expected to see the airline through the Chapter 11 process.

Spirit anticipates being removed from the New York Stock Exchange shortly.

The airline has assured that it will continue to operate flights during the bankruptcy proceedings, allowing customers to book and travel without disruption. Passengers need not be too concerned about their travel plans or frequent flyer miles for now.

According to Robert W. Mann Jr., former airline executive and current president of R. W. Mann and Co., “In the immediate future, operations will likely remain reduced.” He noted if passengers have already been informed about flight cancellations or rebookings, they should focus on that.

Spirit had already announced furloughs for pilots and capacity reductions to handle ongoing financial challenges, in addition to well-known engine troubles that have affected many Airbus A320s industry-wide. Since Spirit exclusively operates A320 aircraft, it has faced significant challenges due to these issues, which led to capacity limitations.

Here’s what passengers need to understand about Spirit’s bankruptcy situation.

What will happen to current flight bookings?

For the immediate future, most flights are expected to operate as planned.

Mann expressed confidence that Thanksgiving travel is unlikely to be interrupted; however, chances of schedule adjustments and cancellations may increase later in winter.

“By the time we reach the 45-day mark from now, which lands around the new year, we might see different changes,” Mann mentioned.

Passengers with existing Spirit reservations should keep an eye out for communications regarding any alterations to their travel plans as their departure date approaches.

“Updates regarding flight changes, rebooking, or cancellations are most likely to come directly from the airline,” Mann added. “It’s also essential to be informed about the recent Department of Transportation regulations that protect passengers’ rights.” The Department of Transportation has recently established new rules mandating airlines to provide passengers with full refunds if flights are canceled or delayed by over three hours domestically or six hours internationally, but only if they opt not to take alternate flights offered by the airline.

Will I be able to transfer my Spirit loyalty miles to another airline?

Typically, airline loyalty points or miles cannot be transferred; however, frequent flyer programs are valuable and usually endure through bankruptcy periods.

“These programs represent an asset, especially for those potentially acquiring them in the future,” Mann explained. “They effectively come with a customer base, which could serve as a revenue source moving forward.”

There’s also a chance that Spirit could emerge from bankruptcy via a merger. Many industry analysts believe that the upcoming Trump administration may lean towards being more supportive of airline consolidations than the previous Biden administration. Under Biden, a merger attempt between Spirit and JetBlue was rejected, and Frontier Airlines recently withdrew its proposal to merge with Spirit, as originally reported by The Wall Street Journal. There is potential for these mergers to be reconsidered or for new buyers to emerge amidst changing regulatory conditions.

If Spirit unites with another airline, it’s likely that its frequent flyer program will be merged with that of the new partner.

What will happen to Spirit’s aircraft?

This will vary.

Spirit does not own its entire fleet. For the airplanes that are leased, the leasing company will keep possession and can choose to lease them to Spirit again or another airline, depending on the offers available.

Aircraft owned by Spirit may be sold off to generate funds during the bankruptcy process, but the company has the option to Instead of selling planes, their managers might consider selling other assets such as gates and airport slots if they believe that keeping the planes operational would result in higher earnings.