Spirit Airlines Could Begin Liquidating Soon Amid Rising Costs

According to CNBC, Spirit Airlines could begin liquidating as early as this week. 

Financial Pressure and Bankruptcy Struggles

Spirit filed for bankruptcy twice in less than a year, and they've been struggling. Now, with rising fuel costs, this is another challenge. 

This comes at a time when many airlines are increasing fees for checked bags to help offset rising fuel prices. At the same time, US lawmaker Ritchie Torres is asking for airlines to decrease prices when fuel costs eventually come down. 

“We don’t comment on market rumors and speculation,” Spirit said in a statement, CNBC said. 

As for when the liquidation could begin, that's unknown. However, this is coming at a time when the busiest time of year, Spring, is coming to an end. 

To help Spirit survive, pilots and flight attendants made concessions, but it doesn't appear to be making a big enough difference. 

According to JPMorgan, if fuel remained at about $4.60 per gallon this year, Spirit's forecast operating margin for the 2026 fiscal year would fall from -7% to -20%. There would also be about another $360 million of costs over a $337 million cash balance. 

Right now, in New York, Houston, Chicago, and Los Angeles, fuel prices average $4.88 per gallon as of April 2. That's up about 95% since the Iran war began in February. 

Past Setbacks and Failed Turnaround Efforts

In the past, Spirit Airlines had steady profitability and strong margins, but after the pandemic, when wages and costs soared, customer preferences changed, and there was an oversupply of domestic flights that drove down airfares, which harmed the airline. 

Also, in 2023, Pratt & Whitney recalled engines, grounding dozens of Airbus aircraft, and the planned acquisition by JetBlue was blocked by a federal judge, who deemed it anticompetitive. 

According to a court filing in December 2024, Spirit forecast a net profit of $252 million for last year, but in August, it revealed it had lost nearly $257 million and eventually filed for Chapter 11 bankruptcy twice. 

Recently, Spirit tried to win over higher-spending travelers by offering roomier seats and bundled fares that included seat assignments and baggage, per CNBC. This was done to compete with others, but it didn't seem to help. 

We'll see if this liquidation happens.