In One Year, Spirit Airlines Files for Its Second Bankruptcy

Date of filing: August 29 2025 — Spirit Airlines filed for Chapter 11 bankruptcy protection for the second time in under a year. The filing took place in the U.S. Bankruptcy Court for the Southern District of New York .

Although this is Spirit’s second filing — sometimes referred to as “Chapter 22” by industry insiders — the airline confirmed it will continue flying, accept bookings, and honor tickets, credits, loyalty points, and employee wages during the process .

Why Did Spirit File Again?

1. Restructuring in March Didn’t Fix the Core Problems

Spirit first filed for Chapter 11 in November 2024 and emerged from bankruptcy protection in March 2025, converting roughly $800 million in corporate debt into equity, and raising new financing . But despite those changes, the airline still carries over $2 billion in long-term debt and continues to struggle under burdensome aircraft lease costs that were not reduced during the prior restructuring .

2. Mounting Losses and Cash Crunch

In the second quarter of 2025, Spirit reported an operating loss of about $246 million, with quarterly operating costs measured at $1.2 billion—which was around 118 percent of its revenue for that period . The airline also drew down a full $275 million revolving credit line, signaling severe cash pressure .

3. Drop in Travel Demand & Competitive Pressure

Post-pandemic air travel demand, particularly among lower-fare leisure travelers, weakened more than anticipated. Meanwhile, major airlines like United, American, and Delta have rolled out their own basic economy fares that entice price-sensitive flyers—offering more perks at similar prices and drawing away market share from no-frills carriers like Spirit .

These shifts left Spirit’s ultra-low-cost model—once its hallmark—less competitive in a changing travel environment.

4. Failure to Address Cost Structure

As a board member put it, Spirit emerged from Chapter 11 having reduced funded debt and raised equity—but without fixing its bloated cost structure, especially expensive leases and less-flexible labor contracts . This shortcoming forced the airline back into court to seek deeper restructuring.

What’s Next for Spirit?

A. Major Business Overhaul

Spirit plans deep changes to its network and operations. It will trim its fleet, focus on core hubs (like Fort Lauderdale, Orlando, and Detroit), and renegotiate union agreements to lower labor costs . The airline also faces grounded aircraft due to Pratt & Whitney engine defects, adding to its operational challenges .

B. Strategic Shift Toward Premium Travelers

Recognizing shifting passenger preferences, Spirit intends to move upmarket—promoting more premium-tier offerings, upgrading amenities, and attracting higher-paying customers while still cutting costs elsewhere .

C. Merger Discussions Renewed

Spirit has previously rejected a Frontier Airlines takeover and fought off a JetBlue deal blocked by regulators. Now, with fragile finances, merger talks with Frontier have resurfaced . Frontier is also adding new routes out of former Spirit hubs—even as Spirit considers the possibility of combining forces to bolster its position .

Impact and Risks

Short-Term Continuity Assured

Spirit emphasizes there will be no service disruptions. Flights, bookings, loyalty programs, and employee payments are maintained during the Chapter 11 process. Spirit specifically stated no impact on its Labor Day operations in early September 2025 .

Serious Risks Remain

A second bankruptcy increases the likelihood of liquidation instead of a successful turnaround—especially in an industry where second filings have historically led to shutdowns .

Spirit’s parent company has disclosed substantial doubt about its ability to continue as a going concern beyond the next 12 months unless its financial situation improves rapidly .

Investor Repercussions

Spirit's stock plunged around 44 percent following news of the filing and is expected to be delisted from its stock exchange platform . Meanwhile, Frontier and legacy carriers saw a rise in their share prices, as investors anticipate potential gains in market share or possible acquisitions of Spirit assets .

A Brief Timeline

Date Event

Nov 2024 Spirit files Chapter 11 for the first time

Mar 2025 Emerges from bankruptcy after restructuring

Jun 2025 (quarter) Reports a net loss of ~$246M; operating expenses exceed revenue

Aug 11, 2025 Issues earnings and warns about survival risk

Aug 29, 2025 Files for Chapter 11 again—its second filing within the same year

What It Means for Travelers

Flights will continue: Bookings, tickets, loyalty credits, and refund entitlements remain valid.

No immediate disruption during restructuring—employees and suppliers continue to be paid.

Still-useful loyalty benefits: Status and points remain intact.

Travelers may consider being flexible with future trips and monitor updates if route or scheduling changes occur.

What It Means for the Industry

Frontier Airlines is poised to benefit. The airline has launched new routes in former Spirit strongholds and has regained investor confidence amid Spirit’s woes .

The broader takeaway: Ultralow-cost models face increasing pressure as legacy carriers roll out low-fare options offering more value and choice .

If Spirit exits the market entirely, analysts believe its fleet, gates, and routes would be picked up by competitors, further consolidating the U.S. airline industry.

Spirit's second Chapter 11 filing in under 10 months signals that its earlier restructuring was insufficient. With over $2 billion in long-term debt, repeated operating losses, and high leasing and labor costs, the airline is now forced into deeper restructuring or merger decisions.

While Spirit promises to maintain services and preserve value for current travelers, the long-term outlook is uncertain. A successful turnaround hinges on cutting costs, reducing debt, and possibly joining forces with a competitor.

For consumers, this means Spirit flights still operate—but customers and investors alike should keep a close eye on developments. A future merger could reshape U.S. budget air travel.