rewrite this title Spirit Airlines on Brink of Collapse: Here’s What to Do – NerdWallet

This is a developing story.

Spirit Airlines’ demise is imminent, according to reports from various news outlets like The Wall Street Journal, Bloomberg News and CBS News.

Travelers with active itineraries on the budget airline and Free Spirit points may be wondering what their next steps should be. Spirit has struggled in recent years, filing twice for Chapter 11 bankruptcy within the last two years. The war in Iran, which has driven up the cost of fuel, has made things even more untenable.

Here’s what you need to know about Spirit’s potential liquidation in the coming days.

If you’re planning on flying with Spirit, the first thing you should focus on is making alternate arrangements with the expectation that you won’t be flying on Spirit.

One of the best ways to do this is booking a flight with points and miles. Most U.S. airlines allow you to cancel award flights for free when booking with their miles. Locking in a backup award flight early can help save from potential headaches later on — especially if cash prices shoot up due to increased demand. (Delta Air Lines, which allows you to book basic economy award fares, is a notable exception because it charges a cancellation fee in miles for these tickets.)

You’ll also want to keep your eye out for any potential “rescue fares,” where competitor airlines offer discounted tickets to stranded passengers.

There are a few things you can do if you have an upcoming Spirit reservation, but it will largely depend on how you paid for your ticket.

Before we get to that, here’s one thing you shouldn’t do: Proactively cancel your nonrefundable ticket. You might get a Spirit voucher at best, which won’t do you much good if Spirit isn’t flying anymore.

You will need to file a chargeback within a certain period from the original transaction date, typically up to 120 days — but if goods and services aren’t received, that window can get extended. The amount of time you have will vary depending on your card network (such as American Express, Visa and Mastercard).

Generally, issuers allow you more time to file a chargeback when it involves goods and services delivered at a future date; in this case, that’s your upcoming Spirit flight. However, you should still act promptly, since the clock may start from the date you’re notified about the cancellation.

If you paid with a debit card, you aren’t covered by the same protections. However, it’s still worth reaching out to your issuer to see whether they’ll offer any protections voluntarily.

Because the airline was in bankruptcy, it has to prioritize the secured creditors it owes money to, such as banks. While you can choose to file a bankruptcy claim, as an unsecured creditor, you’re last in line for what will likely be a refund worth significantly less than you paid for your tickets.

It’s not clear what will happen to Free Spirit points, and you may very well lose them entirely. Unlike other airline loyalty programs, Free Spirit does not offer members meaningful ways to redeem their points outside of award flights with the airline.

One scenario could involve another airline purchasing the Free Spirit loyalty program, since the customer data can be valuable. In the past, acquiring loyalty programs have offered to convert existing points from the acquired program to the new one. However, this remains a big if, so don’t count on this happening.

Top photo courtesy of Spirit Airlines.

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