Spirit Airlines filed for Chapter 11 bankruptcy protection for the second time in less than a year on Friday, according to CNBC. The budget carrier emerged from its previous bankruptcy in March but struggled with mounting losses and high costs. Spirit now plans to reduce its network and shrink its fleet to cut "hundreds of millions of dollars" annually.

The airline lost nearly $257 million from March 13 through June, despite earlier forecasts predicting a $252 million profit for 2025. Spirit listed assets and liabilities between $1 billion and $10 billion in court filings Friday. CEO Dave Davis stated the airline will use restructuring tools that "virtually every major U.S. airline has used" to improve operations.

Spirit had warned weeks earlier it might not survive another year without additional cash. The carrier borrowed its entire $275 million revolving credit facility and faces potential $3 million daily holdbacks from its credit card processor.

Why This Matters

Spirit's second bankruptcy within 12 months represents an unprecedented failure in airline restructuring. The carrier avoided major cost-cutting measures during its first bankruptcy, including aircraft lease renegotiations and fleet reductions. This conservative approach left fundamental financial problems unresolved after emerging from protection.

The airline's collapse affects millions of passengers who rely on Spirit's low-cost service. The Paypers reports that 2025 has seen multiple airline bankruptcies globally, with Spirit joining Brazil's Azul and regional carrier Silver Airways in seeking protection. Spirit's 200-aircraft fleet serves routes where it faces no competition on approximately 10% of its seats, leaving some markets potentially underserved.

Labor unions warned flight attendants and pilots to prepare for deeper cuts. The airline already placed hundreds of flight attendants on voluntary leave and planned to furlough 270 pilots this year.

Industry Implications

Spirit's struggles reflect broader challenges facing ultra-low-cost carriers in the post-pandemic environment. Budget airlines face pressure from legacy carriers offering competitive basic economy fares while maintaining larger networks and loyalty programs. Rising labor costs and fuel prices have squeezed profit margins for carriers dependent on volume rather than premium services.

Competitor Frontier Airlines has aggressively targeted Spirit's markets, announcing 20 new routes that directly compete with Spirit operations. CNBC reports Frontier CEO Barry Biffle expects his airline would capture the majority of Spirit's market share if Spirit collapsed. The two carriers overlap on 35% of capacity, the highest among competitors.

Industry experts suggest Spirit's repeated bankruptcy indicates the ultra-low-cost model faces structural challenges. Legacy airlines have successfully competed for price-sensitive passengers while maintaining operational flexibility and revenue diversification. Spirit's bright yellow planes became synonymous with budget travel, but changing passenger preferences for premium experiences and international destinations have reduced demand for bare-bones domestic service.

Further Reading

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