Spirit Airlines files for second bankruptcy

Published on Aug 30, 2025, 9:50 am CDT

6 min read

Spirit Airlines filed for Chapter 11 protection on August 29, 2025, its second bankruptcy in less than a year. Flights, bookings, and loyalty redemptions will continue during the court process, the company said, while it redesigns its network and rightsizes its all-Airbus fleet. Spirit also warned shareholders that common stock is expected to be canceled as part of the restructuring, and that the carrier may be delisted from the NYSE American exchange. Management said more financing tools could be added as the case advances.

Key Points

Why it matters: The largest U.S. ultra-low-cost carrier is entering Chapter 11 again, raising questions about capacity and fares.
Travel impact: Flights continue, but schedules may thin on marginal routes, and prices could be volatile on overlapping city pairs.
What's next: First-day motions, vendor and payroll approvals, and an initial plan to shrink the fleet and refocus flying.
Spirit expects its common stock to be canceled, with shares likely moving off NYSE American to over-the-counter trading.
Lessors and creditors are in active talks, including disputes over future aircraft deliveries and existing leases.

Snapshot

Spirit's new filing follows a short-lived exit from its first Chapter 11 in March 2025. Since spring, the carrier has faced weak domestic leisure demand, mounting losses, and pressure from credit-card processors seeking additional collateral. The company says it will keep operating as a debtor-in-possession, pay employees as usual, and honor tickets, credits, and loyalty points while it pursues a court-supervised overhaul. Management outlined four pillars, redesign the network around focus cities, cut fleet count to match profitable demand, pursue additional cost efficiencies, and expand upsell tiers such as extra-legroom seats and a new "Spirit First" concept. Spirit also disclosed that equity holders should not expect a recovery when the plan is confirmed.

Background

The second filing caps a turbulent stretch that began when a federal judge blocked JetBlue's acquisition of Spirit in January 2024, leaving Spirit to restructure alone. Spirit first entered Chapter 11 in November 2024 and emerged on March 12, 2025 after converting debt to equity and adding new secured financing. Through summer 2025, results deteriorated, and Spirit warned of "substantial doubt" about its ability to continue as a going concern amid cash burn and tighter credit-card terms. We flagged those risks in Spirit Airlines bankruptcy risk: filing warns cash crunch and again in Spirit Airlines bankruptcy risk intensifies after Q2 loss. Against that backdrop, the company now plans a deeper reset, prioritizing profitable routes and trimming fixed costs.

Latest Developments

Flights continue, but equity likely goes to zero

Spirit says operations, ticket sales, and customer programs will continue during Chapter 11, supported by standard first-day motions that allow payroll and vendor payments on post-petition activity. The company also told investors to expect delisting from NYSE American and warned that common shares would be canceled as part of the plan, meaning no recovery for equity holders. Management said discussions with secured noteholders are ongoing, including potential financing that could be added later in the case.

Fleet and lease pressure accelerate the reset

Shrinking the fleet is central to the strategy, which Spirit says will produce hundreds of millions of dollars in annual operating savings once complete. The carrier disclosed active disputes with AerCap over undelivered and existing aircraft leases, issues that could influence how quickly Spirit reduces obligations and retires older A320-family jets. Pending court approvals, network cuts are likely to target underperforming spokes and redundant flying, while preserving depth in focus cities such as Fort Lauderdale-Hollywood International Airport (FLL), Orlando International Airport (MCO), and Harry Reid International Airport (LAS).

What it means for fares, schedules, and rivals

In the near term, travelers should expect modest schedule trims, fewer off-peak departures, and sharper price swings where Spirit competes head-to-head with larger network carriers. If Spirit pulls capacity from certain city pairs, temporary fare pressure could ease for rivals, then normalize as competitors add selective seats. Frontier and other low-cost players may chase openings, but most U.S. airlines remain cautious about adding supply until demand proves durable. Airports with coveted access, including LaGuardia Airport (LGA), could see increased interest in any assets Spirit opts to monetize through the case.

Analysis

A second Chapter 11, often dubbed "Chapter 22," signals that the first restructuring addressed balance-sheet math more than business-model stress. Spirit's ultra-low-cost strategy relies on dense aircraft, high utilization, and aggressive ancillary revenue, conditions that were undercut by oversupply in Florida and other leisure markets, soft yields, and heightened credit-card collateral requirements that drained cash at the worst possible moment. The new plan aims to right-size the fleet and re-center the network around focus cities where Spirit can fill planes with better pricing and connectivity.

The success of this filing will hinge on three variables. First, lease and debt negotiations, including how quickly Spirit can shed or restructure obligations without losing operational flexibility. Second, revenue execution on the premium-lite upsell, where extra-legroom offerings and fare bundles must lift unit revenue without slowing turns. Third, the competitive response, especially from Frontier and the big three network carriers on overlapping routes from FLL, MCO, and LAS. For now, travelers can continue to book and fly, but should build buffer time into connections and consider refundable options on routes likely to be trimmed. If the plan sticks, Spirit could exit smaller and more durable. If not, deeper consolidation pressure could follow.

Final Thoughts

For travelers, the immediate message is continuity with caveats. Your flights, credits, and points remain valid, and operations continue, but schedules will likely be tuned as Spirit reshapes its network and fleet. Watch for frequency reductions on marginal spokes, tighter seat inventory around holidays, and faster price moves when sales drop. If you rely on FLL, MCO, or LAS, check schedules early and often, and keep a backup on peak weekends. However the court case unfolds, the outcome will ripple across U.S. leisure markets, making this a pivotal chapter in the Spirit Airlines bankruptcy.