Points Guy founder Brian Kelly discusses how the Spirit Airlines bankruptcy could affect travel.
In 2024, several well-known companies filed for bankruptcy protection in the United States. Some filed for basic financial restructuring, allowing them to continue operating, while others announced the closure of many brick-and-mortar locations to stave off liquidation.
Retail outlets are the most affected. However, several restaurant chains and one airline were affected.
COMPANIES ARE GOING BANKRUPT THE FASTEST SINCE 2020: ‘HISTORIC RAL’
LOS ANGELES, CALIFORNIA – JUNE 1: A Spirit Airlines flight takes off from Los Angeles International Airport (LAX) on June 1, 2023 in Los Angeles, California. More than 40 percent of Spirit Airlines flights across the country were delayed today after the u (Getty Images)
Spirit Airlines
The low-cost airline filed for Chapter 11 bankruptcy protection in November, facing more than $1 billion in threatened debt payments and accumulating more than $2.5 billion in losses as of 2020. Spirit has faced challenges such as reduced passenger numbers during the pandemic , competition from major carriers and most importantly, the blocked merger with JetBlue.
Despite the filing, Spirit continues to operate as customers can book flights and redeem frequent flyer points.
Carle Place, NY: Big Lots store in Carle Place, New York, July 23, 2024. (Howard Schnapp/Newsday RM via Getty Images/Getty Images)
A big lot
The discount retailer with more than 1,300 outlets filed for bankruptcy protection in September. With declining sales and mounting debt reaching $3.1 billion, the retailer initially announced it would close approximately 545 stores. The company later announced that, due to a failed deal with private equity firm Nexus Capital, it would close all remaining 963 locations.
However, on Dec. 27, the company announced an agreement with Gordon Brothers Retail Partners LLC that would prevent the closing or potential closing of all other locations. There are no details yet on which locations will remain open, and the deal still requires approval from a bankruptcy judge.
SPIRIT PREPARING FOR BANKRUPTCY AFTER FAILED FRONTIER NEGOTIATIONS: REPORT
A Red Lobster restaurant in Alexandria, Virginia, on Friday, June 7, 2024. Seafood chain Red Lobster, which filed for bankruptcy last month, will appear in bankruptcy court on June 14. (Photo: Ting Shen/Bloomberg via Getty Images / Getty Images)
Red lobster
The seafood chain, which opened its first location in Lakeland, Fla., in 1968, filed for Chapter 11 bankruptcy protection in May. The company has faced significant financial challenges, including higher food costs, higher wages and rising commercial rents. Food prices also brought traffic to a halt as more people chose to cook at home.
Some analysts also pointed to Red Lobster’s “endless shrimp” offer, where customers could eat as much shrimp as they wanted for just $20. A report in the Los Angeles Times spoke with a woman who bragged about eating 108 shrimp during a four-hour meal.
“I think the difference between something like Olive Garden with endless breadsticks and Red Lobster with bottomless shrimp is that the shrimp is like an appetizer, while the breadsticks are more of a side dish,” Jim Salera, a research analyst at Stephens focused on restaurants and packaged foods and drinks, he told FOX Business. “The goal of any type of business is to attract consumers and then either add additional purchases to the ticket, whether it’s alcohol or, you know, appetizers, those kinds of things expand the ticket.”
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“You already have a small profit margin,” Salera said. “You can very easily go beyond that when you’re attracting consumers who just want to have that one item or opt in to that one offer rather than branching out across the menu.”
Eric Revell of Fox Business contributed to this report.
