Points Guy founder Brian Kelly discusses how Spirit Airlines’ bankruptcy could affect travel.
In 2024, several well-known companies filed for bankruptcy protection in the United States. Some have filed for basic financial restructuring, allowing them to continue operating, while others have announced the closure of multiple physical locations to avoid liquidation.
Retail outlets were hit hardest. However, several restaurant chains were affected and one airline.
COMPANIES GOING BANKRUPTCY AT FASTEST RATE SINCE 2020: A ‘HISTORIC Surge’
LOS ANGELES, CALIFORNIA – JUNE 01: A Spirit Airlines plane takes off at Los Angeles International Airport (LAX) on June 1, 2023 in Los Angeles, California. Over 40 percent of Spirit Airlines flights across the country were delayed after an hour today (Getty Images)
Spirit Airlines
The budget airline filed for Chapter 11 bankruptcy protection in November, facing more than $1 billion in looming debt payments and racking up more than $2.5 billion in losses as of 2020. Spirit has faced such challenges such as reduced travel during the pandemic, competition from major carriers and, most importantly, a stalled merger with JetBlue.
Despite the registration, Spirit continues to operate, as customers are allowed to book flights and take advantage of frequent flyer points.
Carle Place, NY: Big Lots store in Carle Place, New York on July 23, 2024. (Howard Schnapp/Newsday RM via Getty Images / Getty Images)
Very Big
The discount retailer, with more than 1,300 locations, filed for bankruptcy protection in September. With declining sales and mounting debt that reached $3.1 billion, the department store 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 963 remaining locations.
However, on December 27, the company announced an agreement with Gordon Brothers Retail Partners LLC that would avoid the possible 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 PREPARES FOR BANKRUPTCY FORCE AFTER FAILURE OF BORDER TALKS: REPORT
A Red Lobster restaurant in Alexandria, Virginia, Friday, June 7, 2024. Seafood restaurant chain Red Lobster, which filed for bankruptcy last month, will be 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, Florida in 1968, filed for Chapter 11 bankruptcy protection in May. The company had significant financial challenges, including higher food costs, higher wages and increased commercial rents. Food prices also blocked traffic as many more people decided to cook at home.
Some analysts also highlighted Red Lobster’s “endless shrimp” deal, in which customers could eat as much shrimp as they wanted for just $20. A report in the Los Angeles Times spoke to a woman who bragged about eating 108 shrimp during a four-hour meal.
“I think the difference between something like an olive garden with bottomless bread and red lobster with bottomless shrimp is that the shrimp is like a first course, while the bread is more of a side,” Jim Salera, a research analyst at Stephens focused on restaurants and packaged food. and drinks, told FOX Business. “The goal with any kind of deal like that is to bring in customers, and then you either add additional purchases to the ticket, whether it’s alcohol or, you know, appetizers, things like that 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 are just looking to have that one item or engage with that offer and not branch out into the menu.”
Eric Revell of Fox Business contributed to this report.
