Points Guy founder Brian Kelly talks about how Spirit Airlines bankruptcy could impact travel.
In 2024, several well-known companies filed for bankruptcy protection in the United States. Some companies have applied for basic financial restructuring to allow them to continue operating, while others have announced the closure of many physical stores to prevent liquidation.
Retail stores were the hardest hit. However, several restaurant chains and one airline were affected.
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LOS ANGELES, CALIFORNIA – JUNE 1: A Spirit Airlines plane takes off from Los Angeles International Airport (LAX) on June 1, 2023 in Los Angeles, California. More than 40 percent of Spirit Airlines flights nationwide were delayed today. (Getty Images)
spirit airlines
Low-cost airline Spirit filed for Chapter 11 bankruptcy in November, facing more than $1 billion in debt payments and accumulating more than $2.5 billion in losses since 2020. Spirit has struggled with declining passenger numbers due to the pandemic, competition from major airlines and, most importantly, a blocked merger with JetBlue.
Despite the filing, Spirit remains open as customers can still book flights and redeem frequent flyer points.
Carl Place, New York: July 23, 2024 at Big Lots Store in Carl Place, New York. (Howard Schnapp/Newsday RM via Getty Images/Getty Images)
big lot
The discount retailer, which has more than 1,300 stores, filed for bankruptcy protection in September. The retailer initially announced it would close about 545 stores as sales declined and debt hit $3.1 billion. The company later announced it would close all 963 remaining stores after a deal with private equity firm Nexus Capital fell through.
However, on Dec. 27, the company announced an agreement with Gordon Brothers Retail Partners LLC that averts the potential closure of all other stores. Details about which stores will remain open have not yet been released, and the deal still requires approval from a bankruptcy judge.
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Friday, June 7, 2024, Red Lobster Restaurant in Alexandria, Virginia. Seafood restaurant chain Red Lobster, which filed for bankruptcy last month, will appear in bankruptcy court on June 14th. (Photographer: Ting Sheng/Bloomberg via Getty Images/Getty Images)
red lobster
The seafood chain, which opened its first store in Lakeland, Florida, in 1968, filed for Chapter 11 bankruptcy protection in May. The company faced significant financial challenges, including rising food costs, rising wages, and rising commercial rents. Food prices also rose as more people decided to cook at home, and traffic was brought to a standstill.
Some analysts also pointed to Red Lobster's “infinite shrimp” deal, which lets customers eat as much shrimp as they want for just $20. A Los Angeles Times article spoke to a woman who boasted that she ate 108 shrimp during a four-hour meal.
“The difference between something like Olive Garden, which has endless breadsticks, and a Red Lobster, which has bottomless shrimp, is that the shrimp is more like the main dish, while the breadsticks are more like the garnish. “I think so,” said Jim Sarella, a research analyst at Stevens who focuses on restaurants and processed foods. he told FOX Business about the drinks. “The goal of these types of deals is to bring in consumers and add additional purchases to their tickets, whether it's alcohol or appetizers. Things like that expand the ticket.”
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“We already have small profit margins,” Sarella said. “If you attract consumers who just want to eat that one item or are interested in that one item and aren’t thinking about expanding their menu, you can easily exceed that goal.”
Fox Business' Eric Revell contributed to this report.
