Spirit Airlines issues dire financial warning to investors over carrier’s future   

Spirit Airlines, the Fort Lauderdale-based budget carrier, has issued a dire warning to investors over its immediate prospects amid growing market concerns that the airline is rapidly running out of cash. The move comes just months after the carrier re-emerged from Chapter 11 bankruptcy protection proceedings with a new strategy in place to compete and survive in the increasingly competitive but plateauing US travel market.

In the company’s latest report filed with the US Securities and Exchange Commission (SEC) on August 11, 2025, the airline warned that without building up the necessary cash reserves to keep operating, the airline could run out of cash “within the next 12 months” and may not be able to continue operatimng “as a going concern.” The airline’s latest filing with the SEC stated that:  

“Because of the uncertainty of successfully completing the initiatives to comply with the minimum liquidity covenants and of the outcome of discussions with our stakeholders, 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.”

Markus Mainka / Shutterstock
The warning could not be clearer. Effectively, Spirit Airlines is not managing to raise nearly enough revenue to cover its daily operating costs, and along with ongoing market challenges, is running out of liquidity. According to the filing with the SEC, a failure to maintain adequate cash reserves could lead creditors to declare the airline in breach of its debt agreements. Such an eventuality could then trigger a series of loan defaults, potentially jeopardising the airline’s future.

Hopes for recovery dashed

Despite a successful emergence from bankruptcy in March 2025 after a significant debt reduction of approximately $US795 million, the airline quickly fell back into deep water. It has been furloughing pilots and selling airplanes in the months since, scaling back operations and taking other steps to cut costs. The moves come as the airline struggles to find its place in the US air travel sector, where ultra-low cost travel has fallen out of favour against airlines that offer frills and extra benefits, regardless of whether this is on a paid-for basis or otherwise. The lack of a credible loyalty scheme against those offered by its competitors is also seen as a major weakness in the Spirit business plan.

Additionally, the airline is being hit hard and has been struggling to recover from a decline in travel demand after the imposition of tariffs in February 2025. US-based airlines, including Spirit, have all reported a decline in US travel after demand collapsed in early February 2025 with US President Donald Trump’s imposition of initial tariffs. Concerns over the fallout from the levies alongside rising inflation in the US caused US travelers to either cancel or hold off booking future trips, spurring most airlines to pull their full-year financial guidance.

Leonard Zhukovsky / ShutterstockEven the US majors, including American Airlines and Delta Air Lines, have publicly announced that they expect profits for 2025 to be flat against 2024, as the uncertainty bites and demand for air travel stagnates. According to reports, Spirit has also been considering selling spare engines or gate rights at key US airports (or both) to raise cash in the short to medium term until demand bounces back.

How has it come to this?

The ultra-low-cost carrier filed for Chapter 11 bankruptcy protection in November 2024, citing high losses, increased competition, and growing debt. Some of those issues were linked to legacy effects of the COVID-19 pandemic, ongoing aircraft supply chain difficulties, and a mass recall of Pratt & Whitney-made geared turbofan engines, some of which were susceptible to cracking due to metal contamination. This issue alone saw dozens of Spirit aircraft grounded, with a lack of spare engines rendering these aircraft unserviceable.    

Even before the Chapter 11 filing, Spirit had been dealing with the fallout of a failed $3.8 billion acquisition by JetBlue. The US Justice Department’s antitrust division sued to block the buyout, arguing it would harm competition, and after a trial in 2023, a federal judge ruled against the JetBlue-Spirit partnership. Spirit’s stock price fell by 47% the day the decision was announced.

Robin Guess / ShutterstockThen, in February 2025, Spirit Airlines rejected Frontier Airlines’ latest merger offer, stating that it was less beneficial to shareholders compared to the airline’s Chapter 11 restructuring plan. Frontier’s latest offer repeated its proposal from February 4, 2025, which included $400 million principal amount of second-lien debt for Spirit’s stakeholders and 19% of Frontier’s common equity. The proposal would have eliminated the need for Spirit to complete its previously announced $350 million equity rights offer and required a waiver of the Bankruptcy Court-approved $35 million termination fee. 

Subsequently, the airline emerged from bankruptcy on March 13, 2025, after finalizing a debt restructuring plan, with company officials saying they wanted to move away from the airline’s no-frills reputation and rebrand as a premium option among budget carriers. As part of its bankruptcy exit strategy, the company projected a consolidated net profit of $252 million in 2025 to a federal judge.

Survival still possible?

However, it would appear that the world has changed again in just a few short months, and having spent five months rebuilding the airline and its finances, little has changed behind the scenes at Spirit. Only time will tell whether the airline can weather this latest financial storm, and whether the decision to reject the Frontier Airlines bid in February 2025 was such a shrewd one.    

RELATED

Over 400 Spirit Airlines pilots to suffer from latest cost-cutting measures

The post Spirit Airlines issues dire financial warning to investors over carrier’s future    appeared first on AeroTime.

Go to Source