Travelers have a new reason for concern about a trip on Spirit Airlines.
In a quarterly financial update filed on Monday evening, the Dania Beach, Florida-based carrier warned about its future solvency.
Financial results, Spirit said, are not improving as fast as is necessary to meet the liquidity requirements of its creditors. In other words, the amount of cash and short-term credit available to the airline isn’t keeping pace with incoming revenue. As a result, the airline is looking at selling planes, airport gates or other assets to raise cash, and is in discussions with some creditors over the liquidity requirements.
If these do not work, however, Spirit warned that “there is substantial doubt as to the company’s ability to continue as a going concern within 12 months.”
Spirit could face a second bankruptcy filing — or, worse, a liquidation.
This may sound like deja vu because it is. Last summer, following the collapse of its planned merger with JetBlue Airways, Spirit was losing money and faced pressure from its creditors — particularly the company that processed its credit card payments — to raise liquidity. That culminated in Spirit’s Chapter 11 bankruptcy filing in November 2024.
Spirit emerged from bankruptcy in March smaller and with less debt but with one critical challenge: making money. The airline reported a $184 million operating loss during the three months ending in June, or $186 million from the day it exited bankruptcy in March.
The airline has tried raising revenue by going upmarket. It rebranded its Big Front Seat as “Spirit First” and offers a selection of fare bundles comparable to what travelers find at most airlines. More recently, the airline added a premium economy extra-legroom option onboard its planes.
In addition, Spirit has unveiled new destinations from Belize to Tennessee, and forged a new partnership with U.S. regional Contour Airlines.
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Spirit, however, faces the same slowdown of U.S. domestic leisure travel as other airlines. And while most airline executives say the market is improving, that appears as though it may not happen fast enough for Spirit.
“The company continues to experience challenges and uncertainties in its business operations and expects these trends to continue for at least the remainder of 2025,” Spirit said in its financial filing.
Is it safe to book Spirit?
Few travelers should be concerned about near-term travel on Spirit. The warning to investors looks at a year out, not tomorrow or the next week.
One key date outlined in the filing is Dec. 31, 2025. That is when Spirit must renegotiate an agreement with its credit card processor, one which it warned could require “additional collateral” that would reduce the amount of liquidity it has available.
Spirit will likely disclose more on the gravity of its situation as that end-of-December deadline nears.
If travelers are concerned about booking a flight on Spirit, they may consider buying travel insurance. Just be warned that not all policies cover an airline failing, so be sure to check before you buy.
Opportunities for other airlines
It’s long been the case in the airline industry that one competitor’s struggles are another’s gain. That is very much the case with Spirit.
Frontier Airlines, the country’s second largest budget airline, could gain the most. A Spirit shutdown would mean it would have the low end of the U.S. travel market to itself. It could also possibly pick up dozens of former Spirit aircraft for its own growth ambitions.
“We are going to be last man standing in the low-cost space when you get to next year,” said Barry Biffle, the CEO of Frontier Airlines, on Aug. 5, in what may prove to be a prescient forecast.
Other airlines would also emerge winners. Sun Country Airlines, noted T.D. Cowen aviation analyst Tom Fitzgerald in a report on Monday, could use cuts by Spirit to “begin building a beachhead” at Detroit Metropolitan Wayne County Airport (DTW).
And Spirit’s gates and terminal space at Fort Lauderdale-Hollywood International Airport (FLL) could be appealing to a number of airlines, including JetBlue and United Airlines.
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