Spirit Airlines Expected To File Bankruptcy After Frontier Merger Talks Break Down—What It Means For Travelers

Spirit has been trying to put off bankruptcy by route cuts, getting rid of aircraft and shedding workers.

Frontier was looking to buy them, despite all of their troubles. They had previously been outbid by JetBlue in a merger attempt that was successfully blocked in court by the federal government.

Now it appears that’s off, and a Spirit bankruptcy is likely.

Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines broke down, according to people familiar with the matter. The Florida-based budget airline is in advanced discussions with bondholders to hammer out a bankruptcy plan that would have support from a majority of creditors…Frontier decided not to move forward with such a merger at this time…

It’s unclear why talks between Spirit and Frontier broke down. Perhaps Spirit wanted something for shareholders, and all Frontier would do is something like ‘$1 and assumption of debt,’ or perhaps Frontier sees a better opportunity to acquire the assets in bankruptcy with bondholders taking a haircut.

According to aviation analytics company Cirium, Spirit has been operationally reliable cancelling about 0.71% of flights in 2024 (behind only Southwest) and has operated approximately three quarters of its flights on-time. The carrier represents about 5% of U.S. airline capacity and is the only airline offering flights out of Latrobe, Pennsylvania, and Atlantic City, New Jersey. Spirit’s average fare in June and July was $68 one-way, excluding taxes and fees, compared to an average of over $200 for American, Delta, United and Southwest.

Any bankruptcy would likely mean continued flying, albeit with further route adjustments. Spirit’s mileage program (such as it is) would continued – it’s one of the most valuable assets the company has, and already mortgaged (with covenants that prevent actions that would diminish its value). Over time any reduction in service from Spirit does mean higher fares, though their aircraft would largely remain in demand.

Spirit Airlines wouldn’t have had a problem, of course, had the Justice Department not blocked JetBlue’s acquisition of the troubled carrier. It wouldn’t have mattered that its business model wasn’t a great product-market fit to the current environment, since JetBlue didn’t plan to keep the business model. JetBlue wanted Spirit for the pilots and planes to grow in ways necessitated by its partnership with American Airlines, which is expected to be back on the table with the turnover in administrations.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. And we can thank the Biden hyper aggressive A-holes for preventing a merger that might have prevented this. Let’s Go Brandon.

  2. Thanks Biden for saving us from the certainty of cruel, evil, monopolistic behavior by the 6th largest carrier. Phew!

  3. @ EdSparks58 — And soon, we can blame the idiot-elect for running the entire world’s econony into the ground. It will be grand.

  4. Let’s hope Trump’s DOJ department isn’t down with that anti competitive crap American and JetBlue tried with the Biden administration.

  5. I would imagine they attempt chapter 11 (reorganization), not 7 (liquidation), in hopes of waiting things out for the next administration, then re-attempt the sale/merger again. Or not, we’re all just speculating here.

  6. The DOJ under the current regime made Spirit Airlines radioactive so it is no wonder that an approved white knight cannot be found. A sad situation for employees and investors.

  7. Reduce the debt and then Frontier will be back for a post-bankruptcy acquisition. Spirit should have accepted their initial $3B offer before the JetBlue debacle. Sometimes the highest bid isn’t the best deal.

    Thanks, Joe…

  8. @Gary Why is the low cost carrier model successful in Europe, Ryanair, Easyjet etc,, but a failure here?

  9. When the scamdemic PPP, EBT, Klarma, advanced paycheck title loan revenue stream dries up, times get rough.

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