Crushed Spirit

"In the seven months that we have been here, we tried to put a new formula in. We thought the formula was right. Unfortunately, we took a 1950's airline with its associated cost structure and all and tried to make it a 1980's airline. It didn't happen."

Howard Putnam, Chairman, Braniff International Airways

May 12, 1982

That was the quote from the U. S’s first airline bankruptcy post-Deregulation. Within the next few months, another name might join the airline graveyard, one that was one of the most profitable carriers pre-Pandemic, one that afforded thousands of people the opportunity to fly with their low fares and no frills attitude, an airline that was known for being one of the most cost-conscientious and lowest cost carriers flying, and a brand that is both a late-night comedians dart board, and a budget travelers panacea. I'm talking about the one and only "Home of the Bare Fare", Spirit Airlines.

As of an SEC filing on August 12, 2025, Spirit Airlines has announced it may not survive another year, despite having exited bankruptcy just 5 months prior. The biggest thorn in its side on the creditor's end, Spirits credit card processor is asking for more cash up as collateral or the airline risks not having its contract renewed for 2026. This is reminiscent of what Frontier Airlines went through in 2008 with its processor, First Data. In that case, First Data withheld 100% of that carrier's proceeds, effectively drying up a huge portion of Frontier's liquidity, and forcing them into Chapter 11 bankruptcy. Spirit's credit card processor is US Bank National Association, which had already extended the airlines contract as per the bankruptcy court through to 2026. I'm not completely sure of just how much US Bank is asking for as increased collateral, but if it has Spirit management reeling, it's got to be a substantial chunk of revenue.

"Because of the uncertainty of successfully completing the initiatives to comply with the minimum liquidity covenants and of the outcome of discussions with Company stakeholders, management has concluded there is substantial doubt as to the Company's ability to continue as a going concern within 12 months from the date these financial statements are issued."

U.S. Securities and Exchange Commission Form 10-Q

for Spirit Airlines filed August 11, 2025

These are the exact words as filed by the airline just 48 hours ago. No commercial airline in the United States has ever issued a dire warning like this while it was still operating and flying. Having something like this go public (and this most certainly did) will destroy whatever future bookings you have and evaporate what public image and reputation you still have. Looking back through history all the way to Braniff's shutdown, comments like these only occurred after operations have ceased, except by Howard Putnam of Braniff just days before their shutdown.

Spirit is taking measures to prevent a complete shutdown though, by selling off aircraft, real estate (possibly it's brand-new headquarters building in Dania Beach, Florida, just down the street from its big base at Ft. Lauderdale Airport), spare engines, or access to airport gates. Whatever takeoff and arrival slots the airline has are of really no value to other airlines as most of Spirit's destinations fall under some sort of Open Skies agreement.

Forecasts for the rest of the year in the domestic leisure market do not look good either. All airlines have taken a hit, and huge leisure destinations like Orlando, Las Vegas, and New Orleans are taking massive hits to their tourism bottom lines. What makes carriers like Spirit more vulnerable than the likes of American or United is the fact that they are Ultra-Low-Cost Carriers (ULCC's), their most expensive fare is still usually far lower than what the Big 4 are charging. The reason the Big 4 (American, United, Delta, Southwest, Alaska) aren't feeling the heat quite like Spirit or Frontier is is quite simple. They have certain quantities of seats available at the fares the ULCC's offer, while the rest of the cabin is at higher fares, with more perks, or even into superior cabins or products like Premium Economy and Business/First Class, there for, they can chalk up higher profits spread through more onboard product and yield management.

Another remedy that's been thrown around today was merging Spirit with another carrier such as Frontier Airlines, jetBlue, or even Allegiant. The carrier went down this path the previous 2 years, first with Frontier, which on paper and operationally, made sense. The second was jetBlue, which was a huge cash offer, but made absolutely no sense operationally or even regulatorily. That proposal was nixed by the United States Justice Department on anti-trust grounds. The merger route is something Spirit would not want to go down again, especially with jetBlue’s own financial and shareholder problems, and Frontier going on their own more successful turnaround. Plus, going down the M&A route will incur more costs, none of which would help the carrier out in any way whatsoever.

The Travel Genius Opinion

I hate to say this, I really do, but Spirit Airlines is on the ropes. In my almost 3 decades in the industry, it pains me to see an airline on skid row. Now, I've only flown Spirit a handful of times, once on a rickety Douglas DC-9 from Detroit to New York/LaGuardia before it's transition to the ULCC model, from Los Angeles to Salt Lake City in 2023 on a brand new Airbus A320NEO (complete with an onboard, in-cabin Emotional Support Chicken!), and finally from Ft. Lauderdale to Newark in Spring of 2024 on another A320. I've never had a bad experience with them, and they got me where I needed to be on time, and with my luggage. What more can one ask for, really?

I see this playing out in one of two ways.

Spirit will fold come midnight January 1, 2026. Planes will be parked, everyone laid off, so on and so on. During the ensuing fire sale, all liabilities will be taken up by the secured creditors (if they go straight to Chapter 7 liquidation, of course). The liabilities of course being the debt and the now laid off workforce. The aircraft and real estate will all go up on the chopping block for pennies on the dollar (let’s see if I can snag me a ticket counter back splash), the aircraft go back to the lessors of course, and pickled for storage until new customers pick them up and Pratt & Whitney hangs reliable engines on the wings. I definitely see Frontier picking up a couple fistfuls of the Airbus A320NEO and any of the US carriers circling the Airbus A321NEO stables. The brand-new corporate headquarters that just opened in Spring of 2024 will be temporarily leased out to Spirit Halloween (just kidding) or to some financial or insurance company, maybe even one of those workspaces for lease places that have sprung up in the last decade or so. After that the only places you'll see Spirit Airlines stuff are photos on social media, postings on eBay or at those airline collectible shows that spring up every so often.

Scenario 2 is Spirit somehow comes to terms with US Bank and the other creditors. Chunks of the fleet that weren’t sold off in bankruptcy are now sold off, the total fleet and workforce (from all levels from the C-Suite on down) slashed to new ULCC levels never before seen. Hubs and major bases slashed down to just Detroit, Ft. Lauderdale, Orlando, Atlanta, San Juan or other major Caribbean Island, and Las Vegas. They will continue the turnaround they are working on now, with expansion of the Big Seat Up Front options, their new Premium Economy offering, and multiple-tiered fare levels as most other carriers now offer. The route map will be significantly pared down, and Spirit slowly rebuilds on its own, back into the black, quarter by quarter.

What's known is that between now and the end of the year, Spirit has one hell of an uphill battle ahead of it. Those Bare Fare Taxicabs with wings need all the butts in seats (not to mention revenue in the till) and all the luck in the world, and as I said above, I wish them luck, I hate hearing of another airline liquidating that shouldn't have.