Spirit Airlines, the bright-yellow icon of budget travel in the United States, has filed for Chapter 11 bankruptcy protection for the second time in less than a year, as the embattled company faces mounting financial and operational headwinds. The announcement, made on August 29, 2025, comes just months after Spirit emerged from its previous bankruptcy in March and signals a deeper reckoning for the country’s largest ultra-low-cost carrier.
According to ABC News, the Florida-based airline’s President and CEO Dave Davis described the move as a necessary step to "ensure our long-term success." In a statement released Friday, Davis explained, "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."
Unlike its last bankruptcy, which largely focused on debt reduction and raising equity, this latest filing will see Spirit embark on what it calls a comprehensive financial and operational transformation. The company plans to overhaul its route network, optimize its fleet, address its cost structure, and realign its strategy to better compete in an evolving marketplace. The aim, Spirit says, is to "redesign its network, optimize its fleet, address its cost structure and realign its strategy to effectively compete and meet evolving consumer preferences." (ABC News)
The company has been quick to reassure travelers that there will be no impact on Labor Day travel or other immediate disruptions. "Flights will continue to operate normally and customers can still use their tickets, credits and loyalty points," Spirit confirmed in its public communications. The airline’s Instagram account echoed this sentiment, stating, "Virtually every major U.S. airline has used these tools to improve their businesses and position them for long-term success."
But behind the scenes, the mood is far from celebratory. In a quarterly filing with the Securities and Exchange Commission earlier in August, Spirit Aviation Holdings—the airline’s parent company—admitted there is "substantial doubt" about its ability to continue operating without significant new cash. The company reported a staggering loss of nearly $257 million since March 13, 2025, through the end of June, a sharp reversal from its December 2024 forecast of a $252 million net profit this year. As Axios noted, such a warning is a legally required notice for publicly traded companies facing serious financial deterioration.
Spirit’s struggles aren’t new, and this latest bankruptcy—colloquially referred to as a "Chapter 22"—follows a tumultuous period marked by failed mergers, competitive pressures, and shifting consumer habits. The airline’s attempted $3.8 billion sale to JetBlue was blocked by a federal judge in 2024 at the urging of the Biden administration, and a more recent proposal from Frontier Group was also rejected. Meanwhile, rivals like Frontier have announced 20 new routes to win over Spirit’s customers, intensifying the battle for America’s budget flyers (Fox Business).
“After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success,” Davis said in his open letter to customers. He added, “We have evaluated every corner of our business and are proceeding with a comprehensive approach in which we will be far more strategic about our fleet, markets and opportunities in order to best serve our Guests, Team Members and other stakeholders.”
Spirit’s current plan involves reducing its network and shrinking its fleet, measures expected to cut costs by "hundreds of millions of dollars" annually. As CBS News reported, in its previous bankruptcy, debtholders agreed to exchange $795 million in debt for equity, but the carrier avoided more drastic changes like selling planes or dramatically downsizing its footprint. This time, Spirit is openly considering selling aircraft, real estate, or even airport gate spots to raise much-needed cash. The airline listed assets and liabilities between $1 billion and $10 billion in its filing.
The cost-cutting drive is already being felt by Spirit’s workforce. Hundreds of flight attendants are on voluntary leave, and the airline has planned furloughs for hundreds of pilots this year. The Association of Flight Attendants-CWA, which represents Spirit’s flight attendants, acknowledged the uncertainty facing workers, stating, “This bankruptcy will be harder and look different than last year, but we will keep you closely informed and stick together as we move forward.” The union urged its members to “take an honest look at your personal situation, examine all your options, and prepare for all possible scenarios.”
Spirit’s woes are compounded by broader industry challenges. The airline has struggled with a glut of U.S. flights, a costly Pratt & Whitney engine recall, and a lingering shift in traveler preferences. As Fox Business observed, many post-pandemic travelers are now seeking pricier, more spacious seats and international destinations—trends that have left budget carriers like Spirit scrambling to adapt. In response, Spirit has tried to rebrand itself by bundling fares and offering more premium seating options, but larger airlines retain an edge thanks to their expansive networks and stronger brand loyalty.
Market conditions remain tough. Spirit continues to face "adverse market conditions," including weak demand for domestic leisure travel in the second quarter of 2025, which has contributed to a "challenging pricing environment" (Fox Business). The airline’s financial position has further deteriorated as its credit card processor sought additional collateral, with the ability to withhold up to $3 million per day. In a scramble for liquidity, Spirit borrowed the entire $275 million available under its revolving credit facility.
Spirit’s shares have plummeted—down 72% over the past month and another 45% in after-hours trading on the day of the bankruptcy announcement. The company has been actively engaged with its largest lessors, debtholders, and other key stakeholders to "refine its path forward." According to Axios, Spirit’s aircraft lessors have even contacted rival airlines to gauge interest in some of Spirit’s planes, indicating just how precarious the situation has become.
Despite the turmoil, Spirit maintains that its "Team Members remain focused on offering you a safe journey, with excellent service and an elevated experience," as Davis put it. Yet the path ahead is fraught with uncertainty. While major airlines like United and American have survived bankruptcy and emerged stronger, a second trip through Chapter 11 generally carries a greater risk of liquidation, as restructuring advisers have warned (Axios).
As the airline industry continues to evolve, Spirit’s fate now rests on its ability to execute a more aggressive transformation—one that can restore profitability, win back customers, and convince investors that the company still has a future in the crowded skies.
