Spirit files for second Chapter 11 bankruptcy

November 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

November 2025 Issue

For the second time in less than a year, ultra low-cost carrier Spirit Airlines has filed for Chapter 11 bankruptcy protection amid dwindling cash reserves and mounting losses.

The airline, which emerged from its first bankruptcy in March 2025, announced a “comprehensive restructuring of the airline to position the business for long-term success”. It filed for Chapter 11 protection in the US Bankruptcy Court for the Southern District of New York on 29 August.

This second filing highlights the depth of Spirit’s financial challenges. By November 2024, when it first filed for Chapter 11, the airline had lost more than $2.5bn since 2020. It now carries $2.4bn in long-term debt, most due in 2030, and reported a negative free cash flow of $1bn at the end of the second quarter of 2025. Spirit lost nearly $257m between March and June, despite forecasting a net profit of $252m earlier in the year.

The company has faced multiple headwinds, including intense competition, engine reliability issues with its Pratt & Whitney-powered Airbus A320neo fleet, and the termination of aircraft leases by Irish lessor AerCap. Its attempted merger with JetBlue was blocked in court, and rebranding efforts under ‘Project Bravo’ failed to attract higher-spending customers.

“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,” said Dave Davis, president and chief executive of Spirit. “After 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 to best serve our guests, team members and 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.”

Shortly after filing, the company received court approval to continue operating during the Chapter 11 process. Spirit will maintain service to destinations across the US, Latin America and the Caribbean.

As part of its restructuring, Spirit announced plans to redesign its network, shifting focus to its strongest-performing markets. Historically built around point-to-point travel, the network will now be streamlined. The airline will discontinue service in 11 US cities starting in October, including Albuquerque, Birmingham, Boise, Chattanooga, Columbia, Oakland, Sacramento, San Jose, San Diego, Portland and Salt Lake City. It also cancelled plans to launch service in Macon, Georgia.

Spirit also announced workforce reductions. It will furlough approximately 270 pilots starting 1 November and downgrade 140 captains to first officers on 1 October. More recently, the airline confirmed it will furlough 1800 flight attendants by 1 December, representing nearly one-third of its cabin crew. These measures are part of broader cost-cutting efforts to align staffing with reduced flight capacity.

The restructuring plan includes shrinking the fleet, renegotiating lease obligations and pursuing operational efficiencies. The company expects these changes to generate hundreds of millions of dollars in annual savings.

Despite these efforts, Spirit’s future remains uncertain. Management has warned of “substantial doubt” about its ability to continue operating beyond 2026 without significant capital infusion or strategic change.

Richard Summerfield