Spirit Airlines Warns of Possible Collapse Just 5 Months After Exiting Bankruptcy

Just five months after emerging from Chapter 11 bankruptcy, Spirit Airlines is warning it may not survive the next year.

In its latest quarterly report, Spirit Aviation Holdings — the Florida-based parent company — said there is "substantial doubt" about its ability to keep operating, citing weak demand for domestic leisure travel, high operating costs, and other ongoing challenges.

The company warned these pressures are likely to persist "for at least the remainder of 2025."

Spirit's stock price plunged more than 40% on Tuesday, closing at just $2.10, as investors reacted to the announcement.

The budget carrier, famous for its bright yellow planes and no-frills service, has faced a rocky recovery since the pandemic.

Rising expenses and heavy debt led to its November bankruptcy filing, with losses exceeding $2.5 billion since 2020.

Spirit emerged from bankruptcy in March after restructuring debt and securing new financing, but the financial breathing room appears short-lived.

In an effort to cut costs, Spirit announced last month that about 270 pilots will be furloughed starting October 1, and another 140 captains will be downgraded to first officers on November 1, CNN said.

These moves follow earlier layoffs before the bankruptcy.

Spirit Considers Selling Aircraft and Gates to Boost Liquidity

The airline also revealed that its credit card processing partner is requiring additional funds as collateral, with a contract set to expire on December 31. Losing this agreement could further strain its operations.

To boost cash reserves, Spirit said it may sell or lease aircraft, offload airport gate space, and monetize real estate holdings.

According to AP News, the company is also experimenting with tiered ticket options, offering pricier seats with added amenities in an attempt to attract more customers — a shift from its traditional ultra-low-cost model.

Spirit's relatively young fleet has made it a target for potential acquisitions in the past.

However, previous takeover attempts by JetBlue and Frontier Airlines failed before and during its bankruptcy process. The company has not signaled any current interest in pursuing a merger or sale.

For now, the company insists it is exploring all options to avoid collapse. "We are committed to taking every necessary step to strengthen our financial position and serve our customers," the airline said in its statement.

Originally published on vcpost.com

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