There’s a new proposed class action lawsuit on behalf of Spirit Airlines workers, filed on Tuesday, arguing that the airline terminated nearly its entire workforce on May 2 without the required 60 days written notice required by the WARN Act.
Employees were told on May 2 that it would be their last day, and the suit alleges everyone was given misleading assurances before the layoff. Just two weeks earlier Spirit had been claiming it planned to continue operating and to ignore rumors that it was near ceasing operations. There were even positive statements “in the hours immediately prior” to the shutdown announcement. So the suit seeks 60 days of wages, accrued vacation pay, retirement contributions, and benefits.
- There are WARN Act exceptions that allow reduced notice, although the employer has to still give as much notice as practicable and a brief statement for why the period was shortened.
- Spirit’s WARN letter does lay out their reason for late notice – they were actively seeking new capital, they had an agreement with debtor-in-possession lenders from March, and they were in discussions with the Trump administration about a taxpayer bailout – which did not collapse until the last minute. And they continue to blame the spike in fuel prices for their lack of a viable business plan.
- The exception for ‘unforeseeable business circumstances’ is what will be litigated. Spirit was in its second Chapter 11. There was an expectation it would shut down since at least December before the spike in fuel prices. The airline chose blind optimism and secrecy over giving conditional notice when it said two weeks before shutdown to ignore the rumors.
- Spirit’s argument becomes that a notice would have made financing impossible, and they had a realistic opportunity to obtain it. Did Spirit notify workers as soon as it knew the path to funding had failed? And they’ll argue fuel prices are what did them in, and it wasn’t clear what would happen with the direction of prices. Spirit will also argue to break down operations into different locations, some of which would be too small to be covered by the WARN Act and thus reduce the size of any class.
The President talking up a (likely illegal) taxpayer bailout and then failing to deliver it is the strongest reason why workers were not entitled to WARN Act notice of their impending layoff.
It seems like $200 million to $250 million as an order of magnitude in worker pay that could be at issue. Spirit’s 2025 annual report shows $1.44 billion of salaries, wages, and benefits and 60 days of that is ~ $237 million.
And a claim here would generally sit alongside ordinary administration expenses and above equity and unsecured claims, but below secured claims, debtor-in-possession claims, and carve-outs under the debtor-in-possession order like taxes.
Good luck with that. We’re rapidly reaching a future where we’re all considered independent contractors, so things like “vacation pay,” “retirement contributions,” and “benefits” because our responsibility, not our current employer’s.
THE Problem with this country is there are too many lawyers.
So even if they win they won’t get anything since they are behind secured credits (who will all take a haircut). Pointless exercise
Folks, it’s never really been left or right… it’s top vs. bottom. I feel more for these workers and consumers way more than any other creditors or former shareholders.
Airlines have used the “faltering company” exception and right from the law, as linked by Gary, it does have to be more narrowly defined when looking at a company as a whole with a mass layoff, but given an airline depends on a workforce that isn’t easily replaced (pilots, mechanics, flight attendants, dispatchers) with a sizeable and expensive training footprint past instances have shown they could have done damage by providing a layoff public notice. I think Spirit could site evidence of its last few months of operational issues based on high attrition of dispatchers and pilots especially as a condition that a formal layoff notice would amplify.
The lawsuit also wants accrued vacation and sick time. I can tell you most companies do not pay out accrued sick time unless a CBA requires it. I believe this lawsuit has 6 named individuals and only 2 of them were in CBA positions. The rest were salaried individual contributors. Forfeiture of sick time is part of the employee handbook signed on start of employment. Otherwise, can I have my 5 weeks of accrued sick time I had when I left Spirit? I got my month of vacation paid out.
This went down like any other airline that shuttered without a merger (ExpressJet, ATA, Aloha, Midway, National, Tower, Independence Air, WestAir, etc. etc. etc.)… management makes lots of promises about continuing in some form or another. Otherwise, too many employees bail and the business enters a death spiral it cannot recover from.
Instead – swear you have a great plan and things will turn around. Keep as many employees working until the absolute last day, then lock the doors. As mentioned above, a lawsuit seeking damages (if successful) would make the winners just another creditor against a failed corporation with minimal remaining assets to pay it out. They’d get pennies on the dollar at best.
If anything, the workers should be able to claw back all the millions paid to executives which got Spirit into the mess they were in and use those funds to redistribute to the workers.
The workers were given notice by the media of Spirit’s imminent demise for at least the past 5 months so the workers had plenty of time to figure out an exit strategy. Choosing to stay on a sinking ship when one has the chance to get out of the situation was a choice. Had they been given 60 days notice, the ship would have sunk even faster and they would have lost even more income.
Yay…socialism/communism for everyone! Tax the rich! Unions are the best!
@1991 — That’s what Xi said…
@Bill: I hope you realize that a lot of incentives to executives are in the form of stock and/or options and in a bankruptcy they’re worthless.
The media, including most Boarding Area blogs, made a lot of patently false statements and rumors like the company was going to miss its next pay day or was going to shut down in days… which didn’t happen through 90% of those reports. The media was basically playing a game of limp biscuit for the last year.
Good thing our politicians never do anything like this.
They will get in line with all unsecured creditors, which means pennies on the dollar. There’s that line from the 1978 movie Animal House, you f..k up, you trusted us. That’s what I would say to these employees. You f’d up by listening to corporate bs. NEVER trust the C level when it comes to your job. I sure don’t.
Move on and find another job.
Gary. Other than HDQ staff and flight crews aren’t others (ramp workers, passenger service, etc.) contract workers? Would the contractor need to pay past due wages rather than Spirit?
@JohnC: Other than FLL, all of the stations for Spirit were contract. While the news in several markets (like DTW) is interviewing now former “Spirit customer service agents” they worked for Unifi. The ground handlers, especially if they have other contracts or work at the airport, are probably obligated under WARN. In fact I know of at least two states/airports where this is happening and employees are either going into openings on other contracts or will be paid out.
@NedsKid not in Spirit’s case. Christie got $4.4 million just in retention and short term incentive bonuses in 2024 and got another $1.5 million for being fired in 2025. These were all cash payments in addition to his regular salary. The new CEO got another $4 million for simply accepting the job.
Once the war against Iran started and oil prices went up, Spirit was out of options. That was well known by early March. Just like the unrealistic plan upon the first bankruptcy exit, the plan to get out of the 2nd one had no chance of success and the creditors knew that the plug had to be pulled.
@Bill: Christie had to stick around a year to keep the retention bonus. He left before that period was up. Did they let him keep it or pay the $1.5 million in lieu of it as a severance?
In defense of Spirit management, an airline can never say they might shut down in 60 days as the statement alone insures the death of the airline. Having said that, pay the employees the 60 days salary they are due. They are certainly deserving of the money.
I feel so bad for the Spirit employees that stayed on until the end. A shame for them. I agree with the post about there being tooooo many lawyers, so true!
@Lisa Anniston — So… you hate doctors do ya? Juris doctors… bah!
The lawyers will get first crack at getting paid or they won’t even argue.
1990 is right here
“Folks, it’s never really been left or right… it’s top vs. bottom”…
which is all the more incredible that he thinks that the blue team really is better for average workers.
the top has grown at the expense of the bottom for decades… first in Europe and now in the US regardless of administration.
as for who holds the bill, actual employee pay is high priority in bankruptcy cases including in chapter 7 liquidation. NK actual employees will get paid and probably sooner than later.
contractors are different; Unifi provided a lot of contract ground service for Spirit and is just under half owned by DL and the remainder by Argenbright.
Chances are that even Unifi employees will get paid while DL and Argenbright will have to fight for claims.
it is very possible that Unifi had prepayment clauses that prevented Spirit from running up huge tabs just as with fuel.