Spirit Airlines, the largest low-cost carrier in the US, files for bankruptcy protection for the second time in a year and will downsize its fleet to cut costs

According to Jinse Finance APP, Spirit Airlines, the largest low-cost airline in the United States, filed for bankruptcy protection again on Friday, marking its second attempt at court-led restructuring within a year. It was only in March this year that Spirit emerged from bankruptcy protection, but it failed to stabilize its financial footing and has now fallen into trouble once more. Following the announcement, the parent company Spirit Aviation (FLYY.US) saw its stock price plummet by more than 45% in after-hours trading.

During the previous bankruptcy proceedings, creditors agreed to convert $795 million of debt into equity, but the company did not implement more significant cost-cutting measures, such as disposing of aircraft or drastically reducing its route network. This time, Spirit stated it would cut its route network and shrink its fleet, expecting to reduce costs by "hundreds of millions of dollars" annually. CEO Dave Davis admitted in a press release: "Since the last restructuring, the company has reduced debt and replenished equity, but it has become clear that more efforts and measures are needed to prepare for the future."

Spirit emphasized that despite the renewed bankruptcy, customers can still book and fly on its flights as usual. The company posted on social media: "Nearly all major U.S. airlines have used these tools to improve their business and achieve long-term success."

However, the reality is far from expectations. Spirit had predicted a net profit of $252 million for 2025 last December, but from March 13, when it exited bankruptcy protection, to the end of June, the company accumulated losses of nearly $257 million and warned that if it could not significantly increase its cash reserves, it might struggle to maintain operations for a year. Recently, Spirit was forced to use $275 million of its revolving credit facility and, due to additional guarantees required by payment processors, could have up to $3 million in funds withheld daily. Over the past month, Spirit's stock price has plunged 72%.

Labor relations have also been affected. Unions have warned that pilots and flight attendants will face more adjustments in the future. Hundreds of flight attendants have already taken voluntary leave, and the company also plans to lay off hundreds of pilots this year to save costs. The crew union stated after Spirit's bankruptcy filing: "This bankruptcy will be tougher and different in form, but we will communicate closely and face it together."

Long-standing challenges for Spirit remain unresolved, including an oversupply of flights in the U.S. market, Pratt & Whitney engine recalls, and the failed merger with JetBlue Airways. According to informed sources, some aircraft lessors have recently contacted other competitors to discuss taking over Spirit's planes. Meanwhile, competitor Frontier Airlines announced the launch of 20 new routes, directly targeting Spirit's customer base.

As a representative of low-cost airlines in the U.S., Spirit is known for its bright yellow fuselage and "low fares + high ancillary fees" model, but this model has faced challenges in recent years. In the post-pandemic era, more travelers prefer to purchase more spacious seats and international flights. Traditional major airlines such as United Airlines and American Airlines have also launched basic fare services and offer more ancillary benefits and global route networks, further weakening Spirit's competitive advantage.