Topline
Spirit Airlines stock plunged after the no-frills budget carrier warned it may not survive beyond a year in its quarterly filing, five months after emerging from bankruptcy and weeks after announcing it would furlough hundreds of pilots.
Spirit Airlines, the poster child for no-frills flying, has warned it may not survive another year without more cash.
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Key Facts
In a filing with the Securities Exchange Commission Monday, Spirit Airlines warned that without more liquidity, “management has concluded there is substantial doubt as to our ability to continue as a going concern within 12 months from the date these financial statements are issued.”
The budget airline has “continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel,” the company said in its report.
Spirit said it will need additional cash or it could default to creditors, adding that it is considering selling some aircraft or airport gates.
Spirit Aviation stock cratered 40% Tuesday morning.
Key Background
Spirit Airlines hasn’t turned a profit since 2019. Last November, the budget carrier became the first major U.S. airline to file for Chapter 11 since American Airlines 13 years ago. The airline exited bankruptcy in March. “We are taking necessary steps to ensure we operate as efficiently as possible as part of our efforts to return to profitability,” Spirit said in a statement provided to Forbes last month, adding that furloughing nearly 300 pilots will “better align staffing with our flight schedule.” Spirit has drastically cut capacity, trimming flights by approximately 1 million seats in May and June of this year—a decrease of roughly 24% since last year.
What Is Spirit’s Best-Case Scenario Right Now?
“Spirit will have liquidity issues after the summer and will need to raise, merge, shrink or liquidate,” Savanthi Syth, an analyst at Raymond James covering the airline sector, said in an email to Forbes, adding that while “the first option appears to be out,” lenders “may have incentives to support Spirit with concessions vs. taking write-downs” and a merger may still happen. Frontier proposed a deal in 2022 but was outbid by JetBlue, whose hostile takeover attempt was blocked by a judge. Frontier made another offer in 2024, but Spirit rejected it this past February, saying it was less beneficial to shareholders than its own restructuring plan.The best option for all stakeholders, said Syth, “is where Spirit gets to write off obligations and then merge with an airline like Frontier. It is not clear that the combination can thrive, but it builds scale to be more competitive vs. the big airlines.” Spirit Airlines did not respond to a request for comment by Forbes.
How Are Other Airlines Faring In 2025?
Sagging consumer confidence is hitting airlines’ bottom lines hardest in basic economy tickets—an indication that budget travelers have pulled back on air travel spending. Spending on airlines was down roughly 5% in June and July compared to the same period last year, according to data from Bloomberg Second Measure U.S. Consumer Spend Index. While all major airlines are feeling the pinch, legacy airlines report stronger demand for premium offerings. On their second-quarter earnings calls, executives of the three legacy U.S. airlines noted softer demand for domestic main cabin bookings. Delta Air Lines CEO Ed Bastian said demand softness was “largely contained to the main cabin.” United Airlines chief commercial officer Andrew Nocella noted revenue in “the economy cabin was negative.” And American Airlines CEO Robert Isom reported a 6% drop in domestic unit revenue year over year, noting “the softness in the main cabin persisted throughout the second quarter.”
Further Reading
Spirit Airlines Will Furlough 270 Pilots This Fall—Third Cull In A Year (Forbes)
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