Sonali Tiwary
Spirit Airlines filed for Chapter 11 bankruptcy protection on August 29, 2025, its second such filing in under a year. The discount carrier’s shares fell sharply in after-hours trading following its March bankruptcy exit.
Twice Grounded
Spirit CEO Dave Davis stated in Friday’s announcement: “Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit’s funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future.”
The airline’s previous bankruptcy restructuring involved a $795 million debt-for-equity swap, but Spirit avoided larger operational changes like fleet reduction or network shrinkage.
Numbers in the Red
Spirit has faced mounting financial challenges. The airline lost nearly $246 million in Q2 2025. Total losses since 2020 exceed $2.5 billion.
Spirit warned investors earlier this month it might not survive another year without additional cash. Its credit card processor demanded more collateral, prompting Spirit to draw down its entire $275 million revolving credit facility. The processor can withhold up to $3 million daily from the airline’s revenue.
New Flight Path
The bankruptcy filing outlines plans to:
- Reduce network size
- Shrink the approximately 215-aircraft Airbus fleet
- Focus on key markets including Fort Lauderdale, Orlando, Las Vegas, Detroit, and Newark
- Offer three travel options — Spirit First, Premium Economy, and Value
These measures aim to cut costs by “hundreds of millions of dollars” annually according to company statements.
Passengers Keep Boarding
Spirit confirms flights, reservations, loyalty points, wages, and benefits continue uninterrupted during restructuring. The airline is working with reported advisors including PJT Partners, FTI Consulting, and Seabury; the previous case used Davis Polk, A&M, and Perella Weinberg.
Sector Pressures
Factors contributing to Spirit’s situation include:
- Weak leisure travel demand
- High operating costs, particularly aircraft leases
- Pratt & Whitney engine recalls affecting capacity
- Failed merger attempts (JetBlue merger blocked by DOJ in 2024)
- Competition from legacy carriers’ basic economy offerings
Competitors React
Frontier Airlines has announced new routes competing with Spirit’s network. Aircraft lessors have reportedly contacted rival airlines recently about taking Spirit’s planes.
Spirit previously announced plans to furlough 270 pilots in November, with 140 captains facing rank downgrades.
The bankruptcy filing shows Spirit implementing more substantial operational changes than in its previous restructuring. The airline’s stock faces likely delisting from NYSE American, with shares expected to trade over-the-counter and likely to be canceled with no value for current shareholders.
