Spirit Airlines appears on the verge of joining the chapter 22 club, entering chapter 11 bankruptcy for a second time. The Wall Street Journal reports they’ve hired PJT Partners to help “explore strategic alternatives.”
- They previously filed bankruptcy in November 2024
- And exited in March 2025
- A speedy bankruptcy (contrast to the extraordinarily long 2002 – 2006 bankruptcy for United)
- But one that accomplished very little.
Earlier this Spirit AIrlines issued guidance that it might not survive a year as a going concern. It was not the first time they’ve made this warning.
The carrier exited bankruptcy having restructured debt but without restructuring much of its business. It’s been a money-losing operation since the pandemic, and continues to bleed cash. They raised new equity and raised revolving debt (that’s now been fully drawn) but that’s just kept them operating.
- The airline pulled down capacity (seat miles down 23.9% year-over-year at the end of the second quarter) but it’s very difficult to shrink an airline to profitability because fixed costs amortize over fewer seats.
- They furloughed 200 pilots and eliminated 200 other positions early in the year, and 270 additional pilots are scheduled for furlough November 1. 140 captains get downgraded October 1.
- And they moved away from a ‘bare fare’ with fees and into selling bundled fares, and rebranded the bundled fares in June – and began installing extra‑legroom seats while phasing out the sale of blocked middle seats.
This did not help. Second quarter revenue of $1.02 billion was down more than 20% year-or-year. Their net loss was $246 million for the quarter, with an operating margin of -18.1% (a substantial deterioration from the prior year’s second quarter -11.9%).
Spirit Airlines was once the envy of the airline industry. It had the best margins and generated a strong return, making air travel available to more people and stimulating demand by passengers who weren’t flying otherwise. They had lower costs than competitors, lower fares, and customers adapted themselves to Spirit’s business model to save money.
However, consumer preferences changed and the pandemic exacerbated this. Passengers increasingly wanted a premium product that Spirit wasn’t positioned to sell. It had one of the most toxic brands in any industry.
And they began losing their cost advantage. They paid as much for planes and fuel as everyone else, and labor costs were rising. They tried to sell themselves to JetBlue, but the Biden administration successfully blocked this.
They’ve used their remaining liquidity to keep credit card processing going. But they could still breach minimum liquidity covenants of their debt.
I probably wouldn’t buy Spirit Airlines tickets for travel more than a couple of months out – within a period I’d be confident I could dispute the charges if travel weren’t honored. I also wouldn’t be accumulating their miles – but I wasn’t doing that to begin with.
What would we do without Spirit Airlines, though? They’ve much improved their operation. They really aren’t a bad airline! And they help drive down prices across the industry. Plus they’re an endless source of entertainment.
It’s time to sell the furniture so they don’t have to burn it in a few months.
I think it is safe to say several percent of US airline capacity will be gone by the first of the year.
from the Wall Street Journal
The airline has said it is exploring ways to bring in cash such as selling planes, real estate or excess gate capacity.
@tim dunn – they said that two weeks ago in their filing and i reported it in the thread i linked in this post.
Here is what I wrote August 11:
“And so they’re looking at the sale of additional assets like planes, real estate and gates and “elimination of certain fixed costs.”
That line in the Journal is not what’s news or why the piece was written.
I didn’t copy the first line which is in line w/ what you wrote.
and you haven’t broken any news. You just, responsibly, monitor lots of sources. When other sites shut down their writing by this time of day, I commend you for keeping it going when late-breaking news like this comes along.
Airline stocks had a banner day but FLYY (Spirit’s new ticker) erased all of its gains after hours when this news came out. Other airline stocks will probably head up Monday as the prospect of several percent of capacity is likely to leave the US airline system by the first of the year.
I did not claim to break today’s news – the opening credited WSJ
Biden built that.
I can read that, Gary.
No one peed in your cereal, Gary
Cue the Frontier merger talks. Even though Frontier should pass this time under the circumstances
Great pic, Gary (with the two police vehicles in the foreground) !!! Kind of emblematic of the whole Spirit Experience !
So many of us advised their shareholders to accept the merger offer by Frontier, as recommended by NK management. But shareholders got greedy instead trying to purse a B6 offer that was business-incompatible and anti-trust unwinnable.
Then Frontier gave them another offer during Spirit’s BK. The investors got greedy again and rejected… The current situation is the obvious end result.
no, Marco, NK’s execs had a fiduciary responsibility to take the best offer, which was at the time, the offer from B6 and superseded F9’s offer.
NK couldn’t have known that the DOJ would have shot down B6′ merger attempt.
B6 interfered w/ the intended NK-F9 merger and all 3 may now fail.
F9 is not in much better shape than NK and it is very likely that NK’s mgmt and creditors have approached potential acquirers including F9 and have gotten nowhere.
The NK fleet is owned by a couple of major financial organizations. A big chunk of that fleet is not functioning but NK, like F9, can’t find the places to use those planes even if they were operational.
the US hasn’t seen a belly up for an airline in quite some time. If the US hadn’t pumped so much money into the airline industry during covid, it might have been AA or UA – now it will be a string of smaller carriers.
the airline industry in the US has been massively mismanaged. The evidence is now coming into light.
Classic time ignoring the fact that Deltas own Ed Bastian came to the US gov with palms out stretched looking for handouts.
And don’t bother us with your crap about available lines of credit. They took the cash and claimed they’d have to fire people if they didn’t.
Read the news about them misusing 11.9 BILLION dollars of tax money. But good on you defending that kind of behavior, scumbag.
Il Duce just invested billions into Intel and was a former airline operator. You think he doesn’t want to meddle in these high profile newsworthy situations? He lives for this.
The prior Spirit bankruptcy was during the straddle period between administrations and the creditors couldn’t get done what they wanted to get done without staying in BK and incurring outrageous fees. So they cleaned up the balance sheet and emerged in 3 months with BS projections and kicked the can down the road for a little while. Spirit will file when they decide to stop funding. Could be this year, or really whenever they choose that the moment is right to stop lighting short term money on fire.
B6 is playing footsie with UA but may emerge the big winner here with Spirit, with government support to boot.
The only story here for the time being is that they have now hired PJT instead of continuing to work with A&M. Palace intrigue but nothing has changed otherwise – operations continue to be unprofitable and they need a dance partner. And long term the creditors who will own this thing want to create the next Westjet to rival AC, not play for the bottom of the barrel with Frontier.
As sites like this remind us constantly the value play is in loyalty programs and credit cards not flying. With the right partner there is tons of room to create something big here over the next 5-10 years.
I’m with @Peter; I think our Dear Leader simply can’t resist the spectacle, and soon enough we, the taxpayers, will own a chunk of Spirit, like Intel… funny how it’s now right-wing populists cheering on nationalizing companies (thought that was kinda a lefty thing.) Bizarro world continues.
@1990
Trump continues to prove he knows what is best and doing what is right.
America has never had a better president.
@tim dunn. Agree with Tim as he kind of nailed it. “The airline industry in the United States has been badly manages.” Overall, a very correct observation.
Spirit needs to die. It’s not toxic…..I’d fully cancerous. Much of it isn’t even about ticket prices anymore. It’s a damaged goods brand and nothing more. Hopefully it’s a quick final death & employees can get on with their lives however they can. It’s the continual result of deregulation.
If Spirit Airlines charges admission or broadcasts their weekend Flordia departure gate fights on network televisuon, the extra revenue might keep Spirit out of bankruptcy.
We are past the point of Chapter 22 (Chapter 11 x 2). Any acquisition of Spirit would be fool hardy. Why get tangled in its downward spiral. There’s excess capacity as is.
Just let it fold (Chapter 7 liquidation). The other airlines will pick over the carcass (gates, jets, pilots, slots, hangers, etc). B6 will pick up some volume due to the overlap at FLL & MCO. The airports can put the gates out for bid. Lots of capable pilots floating resumes.
Time to move on.
PS: I’m sure B6 and F9 are happy their respective bids fell through!!
Intel is strategically important. No airline is. There is no reason to invest in any airline and esp one that carries less than 5% of US airline traffic.
liar,
DL did not lead the charge to the WH during covid and most importantly, they came out stronger because of covid than before. AA would have collapsed w/o government help. period. full stop.
we will now see multiple smaller airlines face some type of restructuring and, as much as some want to dream about the “big boys” being able to buy the small fries, liquidation is far more likely. deregulation has been an abject failure from a consumer and competitive standpoint.
“AA would have collapsed w/o government help. period. full stop.”
Citation HEAVILY needed. If you’re going to make outlandish claims like that, you need to prove it. Wall street agreed that while the airlines were struggling they “[didnt] see any of the airlines going bankrupt” during covid, and that means AA as well. Feel free to check yourself. And to think Delta doesn’t accept government money is foolish. There’s proof all over the place.
Saying “period” and “full stop” doesn’t add proof to anything. I’m genuinely tired of you claiming everything you say as fact, when you’ve been wrong about 80% of the time. Remember how you claimed as fact that AA and AS would break partnership after the Hawaiian merger? Remember how you claimed that Delta would There’s tons more examples man.
Hell, even Google AI has a lot of critical things to say about you, mostly never admitting to being wrong even when proven otherwise.
tired,
you have to be in full denial to not know that Doug Parker and AA’s unions were the first people to run to Washington begging for money because AA was too deeply in debt – because of Parker’s buybacks and huge aircraft purchases – that it had no ability to raise cash.
DL and WN had lines of credit that were pulled down as soon as the banking system was stabilized.
absolutely nowhere did I say that DL didn’t accept government money. the fact that you, like so many people argue about something that wasn’t even said says far more about you than me. Far, Far more.
All of the US airlines had enormous cash bleed as they refunded months of advance ticket sales. Government help was needed.
Once.
It wasn’t needed the 2nd and 3rd times.
and Doug Parker was, once again leading the way to DC w/ hands out.
and, most significantly, AA is much worse off financially than it was before covid.
Yes, as hard as it is for you to admit, AA would have been at least in chapter 11 if the government hadn’t done at least rounds 2 and 3 of government aid.
NK will be just one of the casualties of excessive amounts of money poured into the US airline industry. the US airline industry will be more concentrated than if AA had been forced to make a trip through chapter 11 in 2021. and that still might happen
If Delta didnt need the money, then why did they take it? Oh yeah, so they could misuse it. As far as im concerned, any accolade of profitability is marred by this. They stole money.
And if you’re going to claim that AA, a profitable company, is going to go through CH11 in the near future, prove it. That company is still making profit. No, not as much as Delta. Doesn’t mean ch11.
“AA would have been at least in chapter 11” again, looking for proof here. So provide it.
No one said anything to the contrary of Parker going to DC, not even once. It’s common knowledge. You act as if Delta didn’t and then completely misuse it to the point of being illegal. That’s where you’re misrepresenting data. No one here is running internet defense for AA and UAL, making outlandish claims.
This is my second problem with you. Not only do you fellate Delta, you actively cheer for the destruction of other companies.
You hungover clown.
@Walter Barry — hE wAs RiGhT aBoUt EvErYtHiNg… as we nose dive into yet another Republican-induced recession.
You keep ignoring my central question for you: How much does the GRU pay?
Like, please, have some self-respect, and at least get a couple hundred thousand for your ‘work’ like totally-didn’t-know-about-it Youtuber Tim Pool.
@Mantis — I still somewhat think you, Walter, and former regular bigot @Andy S, may all be the same guy, but anyway…
So, you blame the former President. Got it. But, who’s the President now? And, also, between 2017-2021?
What a silly thing to pretend matters here. No, neither #46, nor #45/47, has much to do with Spirit’s financial woes.
Next time you accidentally stub your toe, I bet you blame #44, you know, because his middle name was ‘Hussein,’ and he wore that tan suit. Literally Satan, right?
“Our Vision
At Spirit, we’re committed to building progress in the areas of Diversity, Equity, Inclusion and Belonging, one journey at a time.
We’re creating opportunities for our Team Members and Guests to experience and be a part of our growing diverse and inclusive workforce that allows all people to succeed and new ideas to thrive.
We continue to create a culture of belonging and fair opportunity by learning from our Team Members’ concerns and societal issues, driving change and making an impact in the places where we live and work.”
I guess new ideas didn’t thrive as much as they hoped they would.
Maybe they should have focused on old ideas first, like be profitable before you give a moment’s thought or spend a dollar on anything else.
I wonder if the person who wrote this is still employed by Spirit.
I hear ICE is looking for aircraft
tired,
no one said that other airlines didn’t take the money.
The only question is who would have failed if DC didn’t open the purse strings not just once but 3 times.
AA would not be here in its present form and no one is cheering anyone’s demise to point that out.
there are multiple airlines that are hanging on by a thread and the amount of capacity they fly on a combined basis is not that much less than what AA flies.