Second Bankruptcy in Less Than a Year Puts Spirit Airlines’ Future in Doubt

Spirit Airlines, the U.S.’s largest ultra-low-cost carrier, filed for Chapter 11 bankruptcy protection on August 29, marking its second bankruptcy filing in less than a year. Despite emerging from bankruptcy only months ago in March 2025, Spirit continues to struggle with financial instability amid mounting losses, intense competition, and changes in travel demand. The latest filing signals a major overhaul as the airline seeks a more sustainable path forward.

The Road Back to Bankruptcy

Spirit’s initial bankruptcy filing occurred in November 2024 as the budget airline grappled with heavy debt and prolonged losses. That first bankruptcy focused primarily on reducing funded debt and raising equity capital, giving the company a temporary reprieve.

However, Spirit’s president and CEO, Dave Davis, acknowledged in a statement that those efforts fell short of stabilizing the airline. “Since emerging from our previous restructuring…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,” Davis said.

Plans for Restructuring and Cost Cutting

Spirit intends to leverage the Chapter 11 process to execute a “comprehensive” restructuring. This includes shrinking its fleet size to better match market demand and refocusing its route network to prioritize key markets where the airline is most competitive.

The airline also plans to pursue further cost efficiencies across various parts of the business, aiming to reduce expenses by hundreds of millions of dollars annually. Additionally, Spirit hopes to expand its premium offerings—a recent attempt to attract higher-paying customers and diversify revenue streams beyond its traditional ultra-low-cost model.

Impact on Passengers and Employees

Spirit has reassured passengers that normal operations, including ticket bookings, scheduled flights, ticket credit usage, and loyalty program benefits, will continue uninterrupted during the bankruptcy process. The airline stressed it remains fully operational and committed to customer service during this difficult period.

Meanwhile, labor unions warned employees to prepare for potential furloughs and layoffs as cost-cutting measures deepen. Hundreds of flight attendants are already on leave, and the airline plans to furlough a significant number of pilots before the year’s end. The Association of Flight Attendants-CWA urged members to consider all scenarios while promising support throughout the process.

Financial Challenges and Market Context

Spirit’s financial troubles come amid weakening demand for domestic leisure travel and fierce competition from legacy carriers and other low-cost airlines. The impact of President Trump’s tariff policies and overall economic uncertainty has further pressured profitability.

In its recent financial disclosure, Spirit warned of “substantial doubt as to the company’s ability to continue as a going concern” without additional liquidity. The airline has tapped its revolver credit line and is exploring asset sales, including aircraft and airport gate slots, to raise cash.

What’s Next for Spirit Airlines?

The filing kicks off a court-supervised restructuring that aims to leave Spirit better positioned to compete in a volatile airline sector. Industry experts speculate whether the airline might pursue merger talks or partnerships, though the company recently turned down a proposal to merge with Frontier Airlines. A major sale to JetBlue was blocked by regulators in 2024.

As Spirit navigates bankruptcy for the second time in less than a year—a rare occurrence colloquially called “Chapter 22”—its future remains uncertain. Travelers, employees, and investors will be watching closely as the airline implements its strategic changes.

Summary

Spirit Airlines’ second Chapter 11 bankruptcy filing underscores ongoing struggles to stabilize finances after years of losses and competitive challenges. The airline’s plans to trim its fleet, refocus routes, cut costs, and expand premium offerings signal a major transition. Despite financial uncertainty, Spirit continues full flight operations and customer service as it pursues a court-supervised restructuring to ensure long-term survival in a tough market.