Spirit Airlines could liquidate as early as this week, sources say

Spirit Airlines could liquidate as early as this week, according to people familiar with the matter.

They spoke on the condition of anonymity to discuss matters that had not yet been made public.

The budget carrier has been struggling to regain its footing from its second bankruptcy in less than a year, but it now faces the added challenge of a spike in the price of fuel. Fuel is airlines’ biggest expense after labor.

“We don’t comment on market rumors and speculation,” Spirit said in a statement.

The exact day the carrier could begin liquidation wasn’t immediately clear. Bloomberg earlier reported on the potential liquidation.

The news comes just as the U.S. airline industry, including Florida-based Spirit, is wrapping up its busy spring break season.

Pilot and flight attendant unions had made concessions in recent months in a bid to help Spirit survive. The airline had planned to shrink and focus on high-demand travel periods and routes in a bid to exit bankruptcy as early as this spring.

Spirit enjoyed largely steady profitability for years and enviable margins in the industry. But things took a turn after the pandemic, when wages and other costs soared, customer preferences changed, and an oversupply of domestic flights drove down airfare, which was especially punishing for U.S.-focused carriers that don’t enjoy a buffer from plush first-class cabins and large credit card and loyalty program deals.

Its problems snowballed after a Pratt & Whitney engine recall grounded dozens of its Airbus aircraft starting in 2023 and its planned acquisition by JetBlue Airways was blocked two years ago by a federal judge who ruled it was anticompetitive, leaving both carriers to fend for themselves against a backdrop where larger carriers dominate.

Spirit forecast it would generate a net profit of $252 million last year, according to a court filing in December 2024, but it said in an August report that it lost nearly $257 million in a matter of months stretching from March 13, after it exited its first Chapter 11 bankruptcy, through the end of June. It filed for Chapter 11 bankruptcy protection again less than a month later.

The airline had tried in recent years to win over higher-spending customers by offering roomier seats or bundled fares that include seat assignments and baggage to better compete with larger rivals whose profits have been buoyed big-spending customers post-pandemic.