Spirit Airlines is preparing to shut down, according to reports from the Wall Street Journal, Bloomberg and The New York Times.
The airline, which was first reported to be considering liquidation several weeks ago, had hoped to secure a $500 million bailout from the U.S. government before running out of cash. Talks have reportedly stalled, however, with some of the creditors from Spirit’s current bankruptcy opposing the terms of the bailout; the move could have seen the government owning a sizable equity stake in the airline.
It was not immediately clear what timeline Spirit is considering for its shutdown. A spokesperson for the company declined to comment, citing ongoing discussions. As of Friday afternoon, the airline was still operating its normal schedule.
Spirit has roughly 9,500 employees, according to a source familiar with the matter, although that number increases to 17,000 when including contractors.
The Florida-based airline had hoped to exit its second bankruptcy by this summer after reaching an agreement with creditors in late February; it was in the process of shrinking its fleet and reconfiguring its network in an effort to find a more viable business model.
Since the start of the U.S. war in Iran, the price of jet fuel has surged, wiping out the small profit margin Spirit hoped to achieve as it exited bankruptcy and causing the airline to burn through its cash reserves faster than expected. Jet fuel is the second-largest operating expense for airlines (after labor), and it typically accounts for roughly a third of an airline’s expenses.
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While higher fuel costs have put the squeeze on the entire airline industry, Spirit’s already-fragile position left it in weaker shape than most of its competitors.
Spirit has struggled to return to profitability since the coronavirus pandemic, with a wide array of head winds working against the airline. These include rising costs and an engine defect that forced the carrier to ground a significant portion of its fleet for long periods of inspection and repair.
The airline made changes to its business model in recent years to try and thrive in the current economy: It tried shrinking its footprint and network, as well as adding first-class seats to try and earn crucial premium revenue. However, the changes appear to be too little, too late.
The airline currently flies about 1.8% of U.S. airline capacity, according to airline analyst Tom Fitzgerald of TD Cowen.
Spirit tried to merge with JetBlue in a deal that would have seen the New York-based airline acquire and absorb Spirit, but the merger was blocked by a federal judge in 2024 after the Biden administration sued on antitrust grounds. During the trial, Spirit’s then-CEO Ted Christie testified that without being acquired, Spirit would be at risk of shutting down.
Related: Spirit could shut down: here’s what travelers should know
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