Spirit Airlines has filed for Chapter 11 bankruptcy protection for the second time in less than a year, marking another significant setback for the budget carrier as it struggles with mounting financial pressures and operational challenges.
The Florida-based airline filed the bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York on Friday, less than six months after emerging from its previous restructuring in March 2025. The move came after Spirit reported a devastating net loss of approximately $246 million in the three months ending June 2025.
Spirit’s financial distress became evident when the company borrowed the entire $275 million available under its revolving credit facility last week, signaling a severe cash crunch. The airline’s operating expenses reached $1.2 billion in the latest quarter, representing 118% of its quarterly revenue, a clear indication of its unsustainable cost structure.
CEO Dave Davis acknowledged that the company’s first bankruptcy filing in November 2024 failed to address underlying structural issues. “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,” Davis stated.
The previous restructuring had focused on debt reduction, with bondholders agreeing to convert approximately $800 million in debt to equity and injecting $350 million in cash through an equity rights offering. However, industry analysts noted that Spirit failed to fix its bloated cost structure during the first bankruptcy.
Chief Financial Officer Fred Cromer outlined Spirit’s strategic overhaul in court filings, explaining that the airline is “redesigning its network to focus its flying on key markets to provide more destinations, frequencies, and enhanced connectivity in certain of its focus cities, while simultaneously reducing its presence in certain other cities.”
The restructuring plan includes significant fleet reduction to match capacity with profitable demand. This downsizing is expected to materially lower Spirit’s debt and lease obligations, potentially generating hundreds of millions of dollars in annual operating savings.
Despite the bankruptcy filing, Spirit has assured customers that flight operations will continue normally. The airline emphasized that flights, ticket sales, reservations, and operations remain unaffected during the restructuring process. Passengers can continue to use their tickets, credits, and loyalty points without interruption.
Spirit also committed to maintaining employee wages and benefits, as well as honoring obligations to vendors and suppliers throughout the bankruptcy proceedings.
Spirit’s struggles have created opportunities for rival airlines, with Frontier Airlines already adding routes and exploring further expansion. Industry analysts suggest that carriers including Frontier, Southwest, and United Airlines may be interested in acquiring Spirit aircraft and other assets during the restructuring process.
The airline, recognizable by its distinctive bright yellow aircraft livery, became the first major U.S. carrier to file for bankruptcy since 2011 when it initially sought protection in November 2024.
Adding to its financial woes, Spirit is embroiled in a dispute with aircraft lessor AerCap Holdings over a deal involving 36 Airbus planes scheduled for delivery between 2027 and 2028, further complicating its restructuring efforts.
The airline currently operates routes connecting St. Thomas to Orlando and Fort Lauderdale, with the latter also serving St. Croix, as part of its Caribbean network.
Spirit’s repeated bankruptcy filing underscores the ongoing challenges facing budget airlines in maintaining profitability while competing in an increasingly competitive aviation market.
