Spirit Airlines Files For Chapter 11 Bankruptcy… Again! Now What?

Spirit Airlines has filed for Chapter 11 bankruptcy for the second time in less than a year, which must be some sort of a record, no?

Spirit Airlines files for bankruptcy yet again

In November 2024, we saw Spirit Airlines file for Chapter 11 bankruptcy, given that the airline hadn’t turned a profit since before the pandemic (and wasn’t just racking up mild losses). The airline exited Chapter 11 bankruptcy in March 2025.

During its brief time in bankruptcy, the airline just addressed its debt issues, without addressing its horrible operating losses. That’s bizarre, because the airline was hemorrhaging money, with the worst margins in the industry, and unsurprisingly, that continued even after emerging from bankruptcy.

So there’s now an update, as Spirit has once again entered Chapter 11 bankruptcy. This time around, the company states it will use the Chapter 11 process to implement changes necessary to transition the company to a sustainable future.

The company claims that the Chapter 11 process will provide it with the tools, time, and flexibility, to continue ongoing discussions with all of its lessors, financial creditors, and other parties, to implement a financial and operational transformation. The airline insists that it will continue operating as normal, and that customers can continue to book, travel, and use tickets, credits, and loyalty points.

Through its restructuring process, Spirit claims it will double down on its efforts to:

• Redesign its network, focus on flying in key markets to provide more destinations, frequencies, and enhanced connectivity, in focus cities
• Optimize its fleet, including rightsizing the fleet to match capacity with profitable demand, in line with the redesigned network
• Address its cost structure, including building an industry-leading cost model by pursuing further efficiencies across the business
• Effectively compete and meet evolving consumer demand with its three travel options, including Spirit First, Premium Economy, and Value

Here’s how Spirit CEO Dave Davis describes this:

“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.”

“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. 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.”

“As we move forward, Guests can continue to rely on Spirit to provide high-value travel options and connect them with the people and places that matter most. On behalf of our Board and leadership, I want to thank our Team Members for their continued dedication, resilience and commitment to delivering a safe, reliable operation and excellent service to our Guests.”

Where does Spirit Airlines go from here?

I don’t think anyone should be surprised that Spirit Airlines is filing for Chapter 11 bankruptcy again. During its last bankruptcy court filing, the company somehow projected a net profit of $252 million for 2025 (in contrast to a $1.2 billion loss in 2024), but instead, the airline lost $246 million in the second quarter of 2025 alone.

I continue to be absolutely flabbergasted by Spirit’s previous bankruptcy filing, where the company did nothing to address its costs, while flying with negative 20% margins. I figured “surely these people are smarter than me, and have some sort of genius plan we’re just not seeing yet.” But nope, here we are again, just months later.

On the plus side, at least this time around, Spirit is saying the right things in terms of wanting to address its cost structure, and take advantage of the reorganization process to actually address its cost structure. So you can expect Spirit will want to get out of leases, renegotiate pay rates with employees, etc.

The challenge is, it’s really tough to be a small, independent airline in the United States nowadays. And it’s even tougher when you’re a shrinking low cost carrier, because the ability to maintain a low cost structure relies on continued growth.

For now Spirit is making it sound like it’ll continue operating for years to come. However, I have a hard time imagining any scenario where this doesn’t end either with some sort of a cheap acquisition, or just assets being sold off. I just don’t see any viable path for Spirit as an independent carrier.

What could that all look like, at this point? I think the only possible acquisition would be by Frontier, an airline that’s only doing marginally better than Spirit. Other than that, it seems just trying to acquire part of Spirit’s assets would be the best bet.

I feel terribly for all the great employees at Spirit (the airline really has lovely employees, despite its reputation for having some problematic passengers), as many will certainly be laid off, and those that stick around will likely get a big pay cut.

Meanwhile I’d say this is great news for both Frontier and JetBlue, for different reasons. Maybe it gives them more of a fighting chance to be successful.

Bottom line

Spirit Airlines has filed for Chapter 11 bankruptcy for the second time in a matter of months, after emerging from the previous Chapter 11 proceedings this spring. The airline claims that it will continue operating, but that it’ll take the opportunity to address its cost structure, including renegotiating employee contracts, and ending leases on some planes.

I don’t see any way that Spirit will have an independent future, though I guess we’ll see how this plays out. I still can’t wrap my head around how everyone just signed off on that last bankruptcy round, and lit hundreds of millions of dollars on fire. Folks, if you’re looking to just light that kind of money on fire, reach out to me. I’ll take it off your hands, and I promise not to be a headache.

What do you make of Spirit’s second Chapter 11 bankruptcy filing, and how do you see this playing out?