Spirit Airlines is hanging on by a thread—but it is hanging on.
The budget airline announced a plan Tuesday that would put it on track to exit its second bankruptcy in less than two years and stay in operation. The arrangement will keep the company alive while shrinking its expenses and operations down to an even smaller size than what it aimed for during its first bankruptcy, which it filed for in November 2024.
With financial support from its creditors, Spirit says it plans to emerge from bankruptcy in late spring or early summer. The company plans to keep its core identity as a value carrier that can still offer fliers “the lowest fares in the sky” while bolstering its loyalty program—a tough task in the fiercely competitive field of rewards programs.
Spirit reassured customers that its flights and loyalty program will remain operational through the process. “This agreement in principle is the result of months of hard work and allows Spirit to move toward completing its transformation,” Spirit CEO Dave Davis said in a press release. “Spirit will emerge as a strong, leaner competitor that is positioned to profitably deliver the value American consumers expect at a price they want to pay.”
For Spirit, reducing costs is the name of the game. The airline plans to shrink its debt and lease obligations from $7.4 billion to $2.1 billion, as it navigates its second bankruptcy.
Coming out of the pandemic, Spirit struggled more than most airlines to stay aloft. The company has been buffeted by rising labor costs and supply chain snarls, like its peers have, but also found its business threatened by changing preferences among fliers who once opted for cheap seats in the sky and now prefer more perks.
Spirit shrinks, and shrinks again
In August, Spirit filed for Chapter 11 bankruptcy protection for a second time. Spirit first filed for bankruptcy in November 2024 in the face of a mountain of debt, and aborted merger negotiations.
Following its second bankruptcy, the airline reduced service to a dozen U.S. cities and furloughed a third of its flight attendants in order to stay in the air. “We need to shift our focus to a complete rightsizing of the airline, which means volume-based adjustments to our flight attendant group,” the airline said in an internal email reported by Reuters.
At the time, the drastic measures weren’t a surprise. Spirit previously warned in its August quarterly earnings report that the company was desperate for cash, with its business balanced on a razor’s edge. The dire message came six months after the airline emerged from its first bankruptcy with a plan to trim its business and seek profitability.
Spirit said then that it would pursue “liquidity enhancing measures” that could include selling some aircraft and offloading extra airport gate capacity. “While it is the Company’s goal to execute on these initiatives, there can be no assurance that such initiatives will be successful,” the company wrote at the time.
In 2024, Spirit sold two dozen planes out of its all-Airbus fleet to generate some emergency cash. Then-Spirit CEO Ted Christie told staffers in an internal memo in early 2025 that the airline faced “significant challenges” with its business that necessitated further downsizing. “The bottom line is, we need to run a smaller airline and get back on better financial footing,” Christie wrote.
Spirit turned to a merger with fellow budget carrier JetBlue to give its business a lifeline, but that deal ran into a regulatory wall, and Spirit’s path has been rocky ever since. The Justice Department sued to block the $3.8 billion deal, citing antitrust concerns, and a federal judge sided with the government, killing the merger.
In light of the airline’s ongoing business woes, Spirit (FLYY) was delisted from the New York Stock Exchange late last year.