Points Guy founder Brian Kelly discusses how Spirit Airlines’ bankruptcy could affect travel.
In 2024, many well-known companies filed for bankruptcy protection in the United States. Some have applied for basic financial restructuring, allowing them to continue operating, while others have announced the closure of many physical locations to prevent liquidation.
Retail shops were the most affected. However, several restaurant chains and one airline were affected.
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LOS ANGELES, CALIFORNIA – JUNE 01: 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 across the country were delayed today (Getty Images)
Spirit Airlines
The budget airline filed for Chapter 11 bankruptcy protection in November, facing debt payments of more than $1 billion and losses of more than $2.5 billion since 2020. Spirit faced challenges such as declining ridership during the pandemic, competition from more significant carriers, and more. Most importantly, the blocked merger with JetBlue.
Despite the filing, Spirit continues to operate, as customers are allowed to book flights and take advantage of frequent flyer points.
Carle Place, NY: The Big Lots store at Carle Place, New York on July 23, 2024. (Howard Schnapp/Newsday RM via Getty Images/Getty Images)
Big Lots
The discount retailer with more than 1,300 locations filed for bankruptcy protection in September. Faced with declining sales and mounting debt, which reached $3.1 billion, the 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 be closing all 963 remaining locations.
However, on December 27, the company announced an agreement with Gordon Brothers Retail Partners LLC that would prevent 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 preparing to file bankruptcy after Frontier talks fail: report
A Red Lobster restaurant in Alexandria, Virginia on Friday, June 7, 2024. Seafood restaurant chain Red Lobster, which filed for bankruptcy last month, will be in bankruptcy court on June 14. (Photographer: 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 faced significant financial challenges, including high food costs, high wages and rising commercial rents. Food prices also slowed traffic as many people decided to cook at home.
Some analysts also pointed to Red Lobster’s “endless shrimp” deal, in which customers could eat as much shrimp as they wanted for only $20. A report in the Los Angeles Times spoke to a woman who claimed to eat 108 shrimp during a four-hour meal.
“I think the difference between Olive Garden with the endless breadsticks and Red Lobster with the bottomless shrimp is that the shrimp are like an entrée whereas the breadsticks are like a side,” said Jim Salera, a research analyst at Stephens on restaurants and packaged foods. be focused. And beverages, told Fox Business. “The goal of any type of deal like this is that you bring in consumers, and then you either add incremental purchases to the ticket, whether it’s wine or, you know, appetizers, things like that to expand the ticket. Are.”
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“You already have a small profit margin,” Salera said. “When you’re attracting consumers who just want to get that one item or engage with that one offering and don’t want to go off the menu, you can very easily go beyond that.”
Fox Business’s Eric Revell contributed to this report.
