Spirit Airlines Files for Bankruptcy for the Second Time in a Year amid ‘Comprehensive’ Restructuring

Spirit Airlines is filing for bankruptcy protection for the second time this year.

On Friday, Aug. 29, the budget airline, known for its bright yellow planes, confirmed it has filed for Chapter 11 bankruptcy protection again in the United States Bankruptcy Court for the Southern District of New York. Spirit Airlines previously emerged from Chapter 11 bankruptcy in March.

The airline is now “executing a comprehensive restructuring,” according to a news release, which will involve downsizing its fleet — a change they believe will “generate hundreds of millions of dollars.”

Guests are expected to be able to continue to “book, travel and use tickets, credits and loyalty points,” while employees will receive their pay and benefits amid the restructuring, per the news release.

However, a focus on “key markets” will result in the airline’s presence being reduced in some areas. The company announced it is also planning to “expand” its premium travel options, one of the product enhancements it previously introduced.

News of the second bankruptcy filing comes after CNBC, citing sources “familiar with the matter,” reported that Spirit had privately contacted rival airlines in an effort to gauge interest in some of its planes.”

It also follows the airline having emerged from Chapter 11 bankruptcy in March, which Spirit CEO Dave Davis addressed in the Aug. 29 press release.

“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 Davis.

“After thoroughly 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,” the CEO continued.

“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 in order to best serve our Guests, Team Members and other stakeholders,” he added.

Earlier this month, Spirit warned that it may not survive the next 12 months. The airline’s quarterly earnings report, released on Aug. 11, outlined bleak performance amid “weak demand” for travel.

“The company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel,” the report stated — just days after CEO of Spirit rival Frontier Airlines, Barry Biffle, warned about the future of affordable travel.

In the report, Spirit also said the “challenges and uncertainties” facing the market are expected to continue through the rest of the year, at least.

Spirit stated that it needs its finances to improve more quickly than it’s “currently anticipating,” adding in the Aug. 11 report that there is “substantial doubt as to the company’s ability to continue as a going concern within 12 months.”

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In the years leading up to this year’s double bankruptcy filing and downsizing, Spirit Airlines faced a number of serious challenges.

On Nov. 18, 2024, the airline confirmed its “prearranged” filing in the United States Bankruptcy Court for the Southern District of New York, but said it would continue to operate as normal through the holiday season and into 2025.

In January, a federal district judge blocked Spirit’s attempt to merge with fellow airline JetBlue, per the Associated Press.