Spirit Airlines Filed for Chapter 11 Bankruptcy

Spirit, the biggest U.S. budget airline, filed a Chapter 11 bankruptcy petition after working out terms with bondholders. The airline has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion in 2025 and 2026.The airline said it expects to continue operating normally during the bankruptcy process. Spirit told customers Monday they can book flights and use frequent-flyer points as they ordinarily would, and said employees and vendors would continue getting paid. Several reasons for Spirit Airlines filing for chapter 11 bankruptcy can be seen below. 

• Failed Merger with JetBlue: The collapse of the proposed $3.8 billion merger with JetBlue in early 2024 was a major blow. The merger was intended to create a stronger, low-fare competitor but was blocked by a federal judge due to antitrust concerns. This left Spirit without a crucial financial lifeline.  
• Heavy Debt and Financial Losses: Spirit had accumulated significant debt and reported substantial financial losses, particularly since the start of the COVID-19 pandemic. By the time of the bankruptcy filing, the airline had lost over $2.5 billion since 2020 and faced over $1 billion in debt payments in the coming year.  
• Rising Operating Costs: Like many airlines, Spirit faced increased operating expenses, including rising costs for fuel and labor.  
• Engine Issues: Problems with engine manufacturers forced Spirit to ground some of its aircraft, further increasing operating costs and reducing capacity.  
• Increased Competition: The budget travel market has become increasingly competitive.

Despite filing for bankruptcy, Spirit continued to operate normally and aimed to use the Chapter 11 process to restructure its debt and position itself for long-term success. The company successfully emerged from bankruptcy in March 2025, having reduced its debt and secured new investment. However, the financial difficulties and the failed merger were the primary catalysts for the bankruptcy filing