Spirit Airlines Declares Bankruptcy Again This Year Amid Major Restructuring

Spirit Airlines has filed for bankruptcy for the second time in 2025 as part of a sweeping restructuring strategy. The ultra-low-cost carrier faces mounting financial pressures from rising operational costs, competitive fare wars, and debt challenges. Its restructuring aims to streamline operations, reduce fleet size, and explore premium service offerings to restore stability. Despite the bankruptcy, Spirit has reassured customers that tickets, bookings, and loyalty points remain valid while it works toward recovery.

Spirit Airlines has once again sought bankruptcy protection, marking its second filing this year.

On Friday, August 29, the low-cost carrier, easily recognized for its yellow aircraft, confirmed that it had filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. The company had previously exited Chapter 11 in March.

According to a company release, Spirit has begun a “comprehensive restructuring,” which includes cutting back on its fleet size, a move projected to save the airline hundreds of millions of dollars.

Despite the bankruptcy proceedings, the airline assured travelers they will still be able to book flights, redeem credits, and use loyalty points, while employees will continue to receive regular pay and benefits during the restructuring period.

Spirit also announced it would concentrate more heavily on specific “key markets,” which means scaling back its footprint in other areas. At the same time, the airline revealed plans to broaden its premium travel offerings, building on enhancements it introduced earlier.

The announcement of this second bankruptcy followed a CNBC report that Spirit had reached out discreetly to competitors to assess interest in some of its aircraft. This development came only months after Spirit emerged from Chapter 11 in March, a moment that CEO Dave Davis referenced in the August 29 statement.

Davis explained that the previous restructuring focused on lowering Spirit’s debt and raising equity, but more extensive changes are now needed. He emphasized that the airline has additional options available to strengthen its long-term outlook. He added that after careful consideration of market challenges and recent setbacks, the company’s board concluded that a court-supervised restructuring was the best path to secure the airline’s future.

The CEO noted that Spirit has analyzed every aspect of its operations and is now taking a broad strategic approach, reassessing its fleet, target markets, and growth opportunities, to better serve its passengers, employees, and stakeholders. Earlier in the month, Spirit had already cautioned that its survival over the next year was uncertain. In its quarterly earnings report, released August 11, the airline highlighted poor performance tied to weak consumer demand for travel.

The report explained that the company is being hit hard by oversupply in the U.S. domestic market and sluggish leisure travel, echoing warnings from Frontier Airlines’ CEO Barry Biffle about the tough outlook for budget carriers.

Spirit further stated that these pressures and uncertainties are expected to persist throughout the remainder of the year. The company acknowledged that its finances must rebound faster than expected, adding in the August 11 filing that there is “substantial doubt” about its ability to remain operational over the next 12 months.

In the years preceding this dual bankruptcy and downsizing effort, Spirit Airlines faced multiple difficulties. On November 18, 2024, the carrier confirmed a “prearranged” Chapter 11 filing in the same New York bankruptcy court, but assured passengers that flights would continue through the holiday season into 2025.

Adding to its troubles, a federal judge blocked Spirit’s proposed merger with JetBlue in January, a setback widely reported by the Associated Press.

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Source: people‍