MIRAMAR- Spirit Airlines (NK) has issued a warning that it may not survive the next 12 months, citing a failed turnaround plan and worsening financial pressures. The disclosure, included in its latest SEC filing, signals serious doubts about the carrier’s future.
The low-cost airline, operating from its main base at Fort Lauderdale–Hollywood International Airport (FLL), says it faces the risk of breaching debt covenants, losing key credit card processing agreements, and being forced to sell assets. This comes after a blocked merger attempt with JetBlue (B6) and rising costs that have eroded its once-solid competitive advantage.
Photo: Spirit AirlinesSpirit Airlines Warns of Shutdown
Spirit Airlines built its business model on ultra-low fares, lower operating costs, and strong returns, attracting passengers who might not otherwise fly. Before the pandemic, it boasted some of the best margins in the U.S. airline industry.
However, market dynamics shifted. Travelers increasingly sought more premium services, an area where Spirit was not positioned to compete. Meanwhile, the carrier’s costs for fuel, aircraft, and labor rose to match those of larger competitors, stripping away its pricing advantage.
The situation worsened when the U.S. Department of Justice blocked its planned merger with JetBlue in early 2024. Without the merger’s financial lifeline, Spirit has struggled to recover and maintain profitability.
Risks and Unmet Turnaround Goals
In its second-quarter 10-Q filing, Spirit admitted “substantial doubt” about its ability to operate as a going concern over the next year. Management outlined several critical concerns:
- Potential breach of minimum liquidity covenants tied to debt agreements.
- Non-compliance with current credit card processing requirements.
- The need to secure a new credit card processing deal for 2026, likely requiring significant collateral.
- Possible sale of aircraft, real estate, and airport gate rights.
- Reduction or elimination of fixed costs.
While the airline has implemented network adjustments and cost controls, these measures have not stabilized operations or restored investor confidence.
Outlook and Passenger Considerations
Spirit continues to operate its flight schedule, but its own public warning raises caution for travelers booking far in advance.
Industry experts advise booking no more than a few months ahead to avoid potential disruption if the airline ceases operations.
Loyalty program members may also want to consider the risk of holding large balances of Spirit miles, as they could lose value in the event of bankruptcy or liquidation.
Photo: Clément AlloingTimeline of Events
The story began in March 2022, when Spirit Airlines and Frontier Airlines (F9) announced a merger agreement. The deal aimed to create the fifth-largest U.S. airline, promising $1 billion in annual cost savings and a stronger position against legacy carriers.
By May 2022, the landscape shifted. Spirit’s shareholders accepted a competing acquisition bid from JetBlue Airways (B6), whose offer valued Spirit higher. JetBlue planned to integrate Spirit’s fleet and operations, effectively dissolving its brand to expand JetBlue’s market presence.
However, in January 2024, a federal judge blocked the JetBlue takeover, citing competition concerns and the importance of Spirit’s low fares to price-sensitive travelers.
In October 2024, Spirit resumed merger discussions with Frontier Airlines. Talks reached an advanced stage, but Frontier withdrew, warning that the terms risked undermining its own financial stability.
Just a month later, in November 2024, Spirit filed for Chapter 11 bankruptcy protection under a pre-packaged deal, adding hundreds of millions in new debt to restructure operations.
Frontier made a third acquisition offer in January 2025, but Spirit’s then-CEO, Ted Christie, dismissed it as “woefully insufficient.” By March 2025, Spirit emerged from Chapter 11 and introduced a more upmarket strategy, offering bundled fare products to diversify revenue beyond its bare-bones model.
The turbulence continued in April 2025, when Ted Christie — who had led Spirit for 13 years — unexpectedly announced his resignation. His departure marked the end of an era for the airline, leaving uncertainty about how its strategic shift would unfold.
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