### Struggling Spirit Airlines Contemplates Bankruptcy Amid Criticism Over Failed Merger

Spirit Airlines is reportedly considering filing for Chapter 11 bankruptcy, according to sources from The Wall Street Journal. This development has sparked criticism towards the Biden administration, especially in light of the January decision by U.S. antitrust regulators to block a $3.8 billion merger with JetBlue Airways. Observers argue that this decision might have jeopardized the job security of many employees at Spirit.

The airline's financial troubles are partly attributed to ongoing turbofan engine issues, which have led to the grounding of several Airbus planes. Additionally, Spirit is facing intense competition in the price-sensitive leisure travel market and an oversupply of airline seats in the domestic market. Analysts from Bank of America Securities have pointed out that these engine problems have severely impacted Spirit's traditional ultra-low-cost business model.

Precedent shows that airline mergers, including the thwarted JetBlue-Spirit deal, often result in significant job losses, regardless of whether the target company is already struggling. Historical mergers like those between American Airlines and US Airways, United Airlines and Continental Airlines, as well as Delta Air Lines and Northwest Airlines, have led to job cuts ranging from 1,500 to 3,000 positions, primarily due to the elimination of redundant roles and operational optimizations.

While some argue that bankruptcy and mergers both lead to job losses, Chapter 11 bankruptcy can offer the opportunity for a company to reorganize its debts and operations, potentially saving more jobs than a complete liquidation would. Spirit Airlines’ debt currently stands at around $3.3 billion. Recent examples of airlines undergoing bankruptcy and emerging stronger include LATAM Airlines Group, which filed for bankruptcy in 2020 and reemerged in 2022 as a more robust entity.

Spirit’s stock has been hit hard by these developments, trading 26.28% lower at $1.66 as of Friday, according to Benzinga Pro. The future remains uncertain for the airline as it navigates these turbulent times.