Spirit Airlines survival is at risk. Here’s what to do if you’ve booked with them.
Just months after restructuring its debt in Chapter 11 Bankruptcy, Spirit Airlines has warned investors that its continued existence in the next 12 months is threatened.
In the company’s 10-Q quarterly filing with the Securities and Exchange Commission (SEC), the airline cited reduced demand for air travel and competitive pricing from other airlines as impacting its revenue streams. The company warned that its cash flow could, within the next 12 months, ultimately violate its terms with both creditors and credit card processors, causing them to restrict available cash and require more collateral to continue processing credit transactions.
Spirit Airlines’ stock plunged following the announcement, and most of its competitors posted gains. American and JetBlue, whose Florida-heavy networks are exposed to significant overlap with Spirit, posted gains in excess of 12%.
The airline plans to sell aircraft and other real estate, including airport gate leases, to raise cash. Last month, Spirit said it would furlough 270 pilots and demote another 140 from captain to first officer roles to conserve cash as it also trimmed unprofitable flying from its network.
Spirit could also sell portions of its network or landing slots at congested airports such as New York LaGuardia and Washington’s Reagan National Airport to help raise additional cash. The airline’s Fort Lauderdale hub connecting the U.S. with much of Latin America could also be an attractive asset for competitors.
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Spirit filed for Chapter 11 bankruptcy protection to reorganize its debt in late 2024—the first major U.S. airline to do so since American Airlines in 2011—and reemerged from the process in March, planning to introduce more premium products to attract higher-yielding passengers. The airline started bundling fares during the summer of 2024, in an attempt to offer more inclusive pricing, a shift from the “fee for everything” unbundled fare strategy that had given the airline an infamous reputation among flyers.
Spirit’s operations are unlikely to immediately cease, unless air travel demand takes an immediate and significant downward turn. Travelers wishing to fly Spirit can be sure to protect their investment by purchasing their tickets with a credit card so they can refuse to pay the bill if the airline is ultimately not in operation by the time they fly. It’s also helpful to research alternative flights in case rebooking is required quickly in the event of a cessation of flying.
When an airline ceases operations, other airlines will sometimes accept tickets from that airline at face value or for a processing fee, or they may honor fares that flyers originally paid for their tickets on a shuttered airline with proof of purchase, but there are no obligations for carriers remaining in operation to do so.
Spirit has lost more than $2.5 billion since early 2020, and multiple merger attempts with JetBlue Airways and Frontier Airlines were unsuccessful. Spirit first agreed to merge with Frontier Airlines in early 2022, but later ended those plans in favor of a merger proposal from JetBlue. A federal court blocked the proposed merger with JetBlue in the spring of 2024. Spirit rejected a second offer by Frontier in February of this year.
It has become rare for a major U.S. airline to file for bankruptcy and cease operations. In recent decades, airlines have sought mergers or acquisitions as an alternative to simply ending flight operations and laying off staff. A large national airline has not ceased flying and liquidated in nearly twenty years. In March 2008, Aloha Airlines shuttered flight operations, followed within days by ATA Airlines. At the time, both airlines cited debt obligations and a drop in passenger demand.
Both airlines were significantly smaller than Spirit’s current size at the time of their last flights. Spirit is the 7th largest carrier in the United States in terms of passenger traffic.