Spirits are down at low-cost-carrier Spirit Airlines, after the carrier issued a “going-concern” warning just last week. The news, issued as part of a routine financial filing for investors, raises concerns that the airline may wind up going under in the next year.
The development comes after an already painful period for the Florida-based airline, which failed to post a profit during the COVID era. In January 2024, the US Justice Department won a court case to block JetBlue’s acquisition of Spirit.
Mounting debts from rising operating costs, protracted issues affecting the GTF engines powering its Airbus A320 fleet, and a shifting business environment culminated in the carrier filing for Chapter 11 in November 2024.
Spirit exited bankruptcy four months later, in March 2025, only to find itself still in hot water as weak domestic demand continue to take a toll.
“[T]he company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel in the second quarter of 2025, resulting in a challenging pricing environment,” Spirit explained in its 10Q filing to the US Securities and Exchange Commission (pdf).
“As a result, the company continues to experience challenges and uncertainties in its business operations and expects these trends to continue for at least the remainder of 2025.”
The airline is struggling to raise cash to satisfy its creditors. Consequently, it is open to selling assets including gates and aircraft.
It is also in talks with representatives of its credit card processor, who have “requested additional collateral” to renew its credit card processing agreement, which expires on 31 December 2025.
Spirit had already cut capacity, dropping about 1 million seats in May and June alone (a nearly 24% year-over-year reduction). Related, it will furlough nearly 300 pilots by the end of the year while demoting others back to first officers.
The airline has also been trying to raise revenue by pivoting away from its ultra-low-cost roots and heading upmarket. In a major overhaul unveiled last summer, Spirit added two premium options to its fare structure: Go Big and Go Comfy. The first functions much like domestic first class: a standard recliner alongside premium drinks and snacks, whilst the latter leaves the middle seat open.
In June 2025, it renamed these premium travel options as Spirit First and Premium Economy.
Prospective passengers or those with tickets already in hand may worry if the airline will still exist when it comes time to check in. The risk does not appear to be particularly high in the near term, though longer term is anyone’s guess.
Spirit leadership is certainly optimistic, noting that while the law required them to sound the ‘going concern’ alarm, they don’t see a failure in the cards.
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Featured image credited to Jeremy Dwyer-Lindgren
