Spirit Airlines filed for bankruptcy protection in the wake of pandemic-related travel downturn, increased competition and a failed deal with JetBlue.
The airline has sustained significant financial losses, with debt payments exceeding $1 billion in 2025 and 2026.
The big picture: The airline has received commitments for a $350 million equity investment from existing bondholders and plans to restructure $795 million of debt into stock.
- The bankruptcy filing follows a failed attempt to sell the airline to JetBlue, resulting in a drop of 25% in Spirit’s shares.
Driving the news: The airline has experienced a decline in revenue per mile and profitability, with passengers paying 10% less per mile in the first half of 2021 compared to the previous year.
- Spirit’s costs, particularly labor expenses, have risen, while larger airlines have siphoned budget-conscious customers by offering similar budget-friendly tickets.
- The premium end of the market has surged, affecting Spirit’s budget-focused business, leading the airline to introduce bundled fares with added perks and dropping cancellation fees.
- Spirit was forced to ground dozens of its Airbus jets due to required repairs to Pratt & Whitney engines, leading to pilot furloughs and operational challenges.
- The airline’s decision to reduce its October-through-December schedule by nearly 20% is expected to support fare levels but may benefit its competitors more.
What we’re watching: Despite the bankruptcy filing, Spirit plans to continue operating normally, ensuring customers can book flights and use frequent-flier points as usual.
- The bankruptcy filing marks a significant event in the history of U.S. airline bankruptcies, with the last major carrier to go through Chapter 11 being American Airlines, which emerged in 2013.
Flashback: Frontier Airlines attempted to merge with Spirit in 2022, but the Justice Department contested the deal, leading to its collapse.
