Spirit Airlines could be liquidated this week, according to people familiar with the matter.
They spoke on condition of anonymity to discuss matters that had not yet been made public.
The low-cost airline has been struggling to recover from its second bankruptcy in less than a year, but now faces the added challenge of a rise in fuel prices. Fuel is airlines' biggest expense after labor.
“We do not comment on market rumors and speculation,” Spirit said in a statement.
The exact day the airline could begin liquidation, or whether it would even end up going that route, was not immediately clear. Bloomberg previously reported on the possible liquidation.
The news comes just as the U.S. airline industry, including Florida-based Spirit, is wrapping up its busy spring break season.
The pilot and flight attendant unions had made concessions in recent months in an attempt to help Spirit survive. The airline had planned to downsize and focus on high-demand travel periods and routes in a bid to emerge from bankruptcy this spring.
JPMorgan said in a note last week that if fuel stays around $4.60 a gallon this year, Spirit's forecast operating margin for fiscal 2026 will go from negative 7 percent to negative 20 percent. Spirit could face another $360 million in costs, on a cash balance of $337 million at the end of last year, JPMorgan airline analyst Jamie Baker wrote.
Jet fuel averaged $4.88 per gallon in New York, Houston, Chicago and Los Angeles on April 2, according to Argus, an increase of about 95% since the war with Iran began on February 28.
As Spirit's situation became more difficult, competitors added flights to some of its destinations. Border Airlines and JetBlue Airways They have the largest overlap in the current quarter, with nearly 32% and 21%, respectively, of their capacity “competing head-to-head with Spirit,” Deutsche Bank analyst Michael Linenberg said in a note Thursday.
Spirit enjoyed virtually stable profitability for years and enviable margins in the industry. But things took a turn after the pandemic, when wages and other costs soared, customer preferences changed and an oversupply of domestic flights drove down airfares, especially punishing U.S.-focused airlines that don't enjoy the cushion of plush first-class cabins and great credit card deals and loyalty programs.
Its problems multiplied after a Pratt & Whitney engine recall grounded dozens of its Airbus planes starting in 2023 and its planned acquisition by JetBlue Airways It was blocked two years ago by a federal judge who ruled that it was anticompetitive, leaving both companies to fend for themselves in a context where larger companies dominate.
Spirit forecast it would generate a net profit of $252 million last year, according to a December 2024 court filing, but said in an August report that it lost nearly $257 million in a matter of months stretching from March 13, after emerging from its first Chapter 11 bankruptcy, to the end of June. He filed for Chapter 11 bankruptcy protection again less than a month later.
In recent years, the airline had tried to win over higher-spending customers by offering roomier seats or bundled fares that include seat and baggage assignments to better compete with larger rivals whose profits have boosted high-spending customers after the pandemic.
