Spirit Airlines Faces Uncertain Future: What to Do if You’ve Booked with Them

In the face of reduced demand for air travel and competitive pricing from other airlines, Spirit Airlines has issued a warning to investors that its survival in the next 12 months is in jeopardy. The airline, which recently restructured its debt in Chapter 11 Bankruptcy, stated in its 10-Q quarterly filing with the Securities and Exchange Commission (SEC) that its revenue streams have been significantly impacted. As a result, the company’s cash flow may violate its terms with creditors and credit card processors within the next year, potentially leading to restrictions on available cash and the need for more collateral to process credit transactions.

Following this announcement, Spirit Airlines’ stock plummeted while its competitors, such as American and JetBlue, saw gains of over 12%. This is due to the fact that these airlines have a significant overlap with Spirit’s Florida-heavy network, making them more vulnerable to the same challenges faced by Spirit.

To address its financial struggles, Spirit Airlines has announced plans to sell assets such as aircraft and airport gate leases. In addition, the airline has already implemented cost-cutting measures, including furloughing 270 pilots and demoting 140 others. It has also trimmed unprofitable flights from its network.

In a further effort to raise cash, Spirit may also sell portions of its network or landing slots at congested airports such as New York LaGuardia and Washington’s Reagan National Airport. Additionally, its Fort Lauderdale hub, which connects the US with much of Latin America, could be an attractive asset for other airlines.

It’s important to note that Spirit Airlines will not immediately cease operations unless there is a significant and sudden drop in air travel demand. However, for travelers who have booked with Spirit, it is advisable to protect their investment by purchasing tickets with a credit card. This way, they can refuse to pay the bill if the airline ultimately goes out of business before their flight. It’s also a good idea to research alternative flights in case rebooking is necessary in the event of a sudden cessation of operations.

In the event that an airline does cease operations, other carriers may accept tickets from that airline at face value or for a processing fee. However, there is no guarantee that this will happen, as it is not an obligation for remaining airlines to do so.

Spirit Airlines has suffered significant losses of over $2. 5 billion since early 2020. The airline has also had unsuccessful merger attempts with JetBlue Airways and Frontier Airlines. In 2022, Spirit agreed to merge with Frontier Airlines, but later opted for a merger proposal from JetBlue. However, this was blocked by a federal court in 2024. A second offer from Frontier was also rejected by Spirit in February of this year.

It is rare for a major US airline to file for bankruptcy and cease operations.