Spirit Airlines is preparing to cease all operations. The troubled budget airline had hoped to seal a $500 million government lifeline before running out of cash. People familiar with the matter said that the low-cost airline was unable to obtain the funds needed to maintain operations due to insufficient consensus between some bondholders and the government.
Spirit Airlines has been negotiating a rescue package with the Trump administration: the government would inject capital into the company in exchange for warrants that could be converted into up to 90% of the company's equity in the future.
However, there are disagreements within the Trump administration over whether to rescue and in what manner; at the same time, some bondholders of Spirit Airlines firmly resist the plan, believing that it will harm their own economic interests.
At the same time, airlines are also facing continued cost pressures from soaring oil prices.
People familiar with the matter said that after losing the government bailout, Spirit Airlines' cash flow is about to be exhausted, and it has begun to promote plans to liquidate aircraft assets and fully suspend operations. The specific suspension time has not yet been finalized.
Spirit Airlines has been in Chapter 11 reorganization protection for the past year and a half.
Its once-industry-shattering business model—extremely low airfares and a separate fee for almost all additional services—is now facing fierce industry competition. Years of losses coupled with a heavy debt burden eventually overwhelmed the company.
The company has significantly reduced its business in recent months: Although it still has thousands of employees, it has reduced the size of its fleet and only retains routes to its core hubs such as Detroit, Orlando, and Fort Lauderdale.
In order to delay the bankruptcy process, the company has been selling tickets normally and even launched heavily discounted tickets in recent days.
Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport in Florida.
Spirit Airlines brought the ultra-low-cost airline model to the United States in 2006, following the business strategy of Ryanair in Europe.
At first, American consumers were extremely disgusted with the extra charges for drinking water and paper boarding passes, but they still could not resist the temptation of low-priced air tickets.
Since then, Spirit Airlines has experienced rapid expansion and stable profits, and other airlines have followed suit and imitated this business model.
Less than five years ago, Spirit Airlines was the focus of a bidding war between Frontier Airlines and JetBlue Airways.
At that time, the company chose JetBlue Airways' higher offer and reached a US$3.8 billion merger agreement.
But the merger ultimately fell through. The U.S. Department of Justice filed a lawsuit against it, arguing that retaining an independent Spirit Airlines would be more conducive to market competition and budget-conscious travelers.
In 2024, a federal judge ruled in favor of the Justice Department, officially halting the merger.
A Spirit Airlines plane takes off under blue sky and white clouds at Fort Lauderdale-Hollywood International Airport in Florida.
After the merger failed, Spirit Airlines struggled to operate alone.
The company filed for Chapter 11 bankruptcy protection again last August, just months after emerging from a previous bankruptcy proceeding. Since then, the company has been streamlining operations, selling aircraft, and raising fares, hoping to regain its footing after slimming down and restructuring.
The outbreak of the U.S.-Iran war further aggravated the company's difficulties: the price of aviation kerosene doubled within a few weeks, directly disrupting the bankruptcy reorganization agreement reached between Spirit Airlines and its creditors.