Spirit Airlines might start liquidation as soon as this week, based on insights from sources close to the situation.
They requested anonymity to discuss information that has not yet been disclosed to the public.
The low-cost airline has been attempting to recover from its second bankruptcy within a year, but is now contending with a surge in the cost of fuel, which is the airlines’ second-largest expenditure after labor.
“We don’t comment on industry rumors or speculation,” stated Spirit.
The specific date when the airline might initiate liquidation has not been determined. Bloomberg previously reported on the imminent possibility of liquidation.
This update arrives just as the U.S. airline sector, which includes Florida-based Spirit, concludes its bustling spring break period.
Unionized pilots and flight attendants had made sacrifices recently to assist Spirit in remaining viable. The airline had intended to downsize and concentrate on peak travel seasons and desired routes to exit bankruptcy by spring.
Spirit had maintained a largely stable profit margin over the years, with impressive margins in the industry. However, the situation changed after the pandemic, as wages and other expenses escalated, customers’ preferences shifted, and an excess of domestic flights led to lower airfares, which hit hard U.S.-based airlines lacking the cushion of spacious first-class seating and substantial credit card and loyalty program incentives.
Its difficulties intensified following a Pratt & Whitney engine recall that grounded numerous Airbus aircraft starting in 2023, and its intended buyout by JetBlue Airways was thwarted two years ago by a federal judge’s ruling deeming it anticompetitive, forcing both airlines to navigate a landscape dominated by larger competitors.
Spirit projected a net profit of $252 million last year, according to a court filing in December 2024, yet it reported in an August update that it incurred nearly $257 million in losses during the months following March 13, after emerging from its first Chapter 11 bankruptcy, up until the end of June. It sought Chapter 11 bankruptcy protection once more less than a month later.
In recent efforts, the airline attempted to attract higher-paying customers by providing more spacious seating and bundled fares which encompassed seat selection and baggage allowances to better contend with larger competitors benefitting from high-spending customers after the pandemic.
