A closer look at Spirit Airlines’ bankruptcy comms

Spirit Airlines filed for Chapter 11 bankruptcy protection on Monday after losing more than $2.2 billion since the start of the pandemic, failing to restructure its debt and unsuccessfully attempting to merge with JetBlue at the beginning of the year. It expects the process to be completed by Q1 2025.

Positioning the move as a reorganization bankruptcy to provide Spirit with legal protections, the company published a press release framed as an “open letter” to travelers and a separate investor relations release.

Each announced an agreement with bondholders that the company claims will help it restructure debts and raise the funds it needs to operate during the process. Each offers solid examples for crafting bankruptcy comms, and change comms in general, delivered in a language and messaging style germane to each audience.

What the open letter got right

Spirit’s letter to travelers and customers, distributed by PR Newswire, is short but sweet.

It begins by stating the intention of the message: “We are writing to let you know about a proactive step Spirit has taken to position the company for success.” It then announces the agreement wit bondholders as a means to reduce total debt, give the company more financial flexibility and “accelerate investments providing Guests with enhanced travel experiences and greater value.” The opening also frames the bankruptcy as “prearranged” to hammer home the idea that this is a strategic plan and not a last resort (it’s both).

This opening effectively couches the financial news in language that general audiences can understand, then ties the changes back to things that matter to guests — how it affects their travel experience. Whether water will become free on future Spirit flights remains to be seen.

The letter then bolds and underlines the point it wants those scanning the message to take away: “The most important thing to know is that you can continue to book and fly now and in the future.”

This is followed by assurances that travelers can still use their tickets, credits and loyalty points as normal, join the airline’s loyalty program and expect the same level of customer service from Spirit.

The letter ends with a few more best practices:

• It shares the estimated date of Q1 2025 when the process will be complete, an accountability play.
• It alludes to other airlines that have navigated bankruptcy and emerged stronger (American Airlines an Delta filed after 9/11, but Spirit is the first airline to do this in a decade.) This makes Spirit seem like less of an outlier, even though their debt and case is extreme,
• It offers a landing page to learn more about the company’s financial restructuring. This is a tried and true tactic for any change message—stick to the key points in the message, and direct interested audiences elsewhere to learn more.

“I applaud them for trying to communicate directly with their customers, reinforcing that they can book and fly now and in the future without disruption,” said Vested Managing Director Ted Birkhahn.

“However, they need to ensure they deliver on this promise because mass flight cancellations or service disruptions during this period put them at risk of breaking any remaining trust between the brand and the consumer.”

While Spirit’s open letter captured many best practices of change comms, it avoids some other questions. Birkhahn also pointed out that the statement doesn’t mention any strict adherence to safety standards during the bankruptcy proceedings—a concern on the minds of any traveler following Boeing’s recent crucible.

“When considering flying with an airline in bankruptcy, my main concerns are whether it might be distracted or understaffed, potentially compromising its ability to meet FAA standards, and whether it can maintain normal operations,” he added.

“I realize all airlines are under strict FAA oversight, but consumer perception is Spirit’s reality, and if consumers are fearful of flying the airline, they will likely book elsewhere.”

Glossing over your past mistakes and pretending they never happened is bad PR, while owning them and positioning a financial restructuring as an opportunity to rectify past operational failings is a chance to turn an opportunity into a cornerstone of future success.

How the IR release frames things differently

While the open letter had the boilerplate cautionary legal language in its forward-looking statement, the investor relations release goes into more specific terms using business and legal language.

Four takeaways are listed up top before the press release begins:

• The first says that “Flights, ticket sales, reservations and all other operations continue as normal,” expanding on the commitments in the open letter to include operations.

• The second notes that the restructuring agreement was signed “by a supermajority of Spirit’s bondholders”, explicitly noting that bondholders have agreed to the plan.

• The third defines the Chapter 11 proceedings as “voluntary” and says they have officially commenced “to implement the agreed deleveraging and recapitalization transactions”.

• The fourth gets into the financing details Spirit will receive from existing bondholders and specifically notes that vendors, aircraft lessors and “holders of secured aircraft indebtedness” will be “paid in the ordinary course and will not be impaired.”’

These points anticipate the most likely investor concerns and address them first — always a best practice when crafting business comms. They are consistent with the ideas in the open letter but go into deeper detail, which makes sense for the audience closely invested in business operations and performance.

This release also included the first indication of how Chapter 11 will affect employee compensation, claiming it will not impact team member wages or benefits “which are continuing to be paid and honored for those employed by Spirit”.

A statement from Spirit President and CEO Ted Christie closes the IR note, contextualizing what this news should mean for the company’s bottom line and ending by thanking his team.

What this means for employees

While Christie thanked the Spirit team and the IR release said that employee compensation and benefits would remain unaffected, the question of layoffs still looms. Spirit furloughed hundreds of pilots over the summer and into the fall after announcing pay raises for four executives in a July 8-K filing.

On the heels of the bankruptcy news, a story about Christie’s $2.5 million Florida home isn’t doing any favors for the company’s employer brand, either.

Spirit is at an inflection point—not just over how it communicates with unions, but with employees directly to educate them about what bankruptcy means for their role and business operations in the months ahead.

We don’t know how Spirit communicated this news with employees, and a request for comment from Spirit was not returned at the time of publication.

Cat Colella-Graham, internal comms lead and coach at Coaching for Communicators, believes that foundational change comms best practices can be applied at Spirit to mitigate internal confusion or backlash.

Those include:

• Holding an all-hands meeting and following up with an email. “It’s important to share the what, why, and why it matters to employees first and fast,” reminds Colella-Graham. “To avoid any misinformation, follow up with an email that recaps the facts, offers a resource if you have questions, and a reminder to direct press inquiries to the appropriate media rep. The law firm assigned to the case may require this for compliance.”
• An intranet FAQ. This should include:
  • The roles that are immediately impacted, if any.
  • What employees can do to prepare for next steps.
  • Any resources, support or professional services the company offers employees to help the process.
  • A commitment to communication, including who they can go to with additional questions.
  • Regular updates ahead of developments hitting the news. Finding out bad news about your organization from external sources before hearing it internally is one of the biggest change comms sins you can make— it corrodes trust and can transform employees from advocates to activists.

Colella-Graham also sees this as an opportunity for Spirit’s leaders to demonstrate humility, empathy and consideration for how difficult it is to process this news so close to the holidays.

“Many employees will be essential in this deal,” she said. “If leaders want to retain those essential team members to work the best bankruptcy deal they can including a sale, merger or other administrative remedy, they need to walk shoulder to shoulder with the team.”

Justin Joffe is the editorial director and editor-in-chief at Ragan Communications. Follow him on LinkedIn.’