Spirit Airlines Warns of New Going-Concern Doubts Just Months After Exiting Bankruptcy
Spirit Airlines Warns of New Going-Concern Doubts Just Months After Exiting Bankruptcy
Spirit Airlines has issued a stark warning regarding its ability to continue as a going concern, a mere few months after successfully emerging from Chapter 11 bankruptcy protection. The budget carrier, known for its distinctive yellow planes, cited severe operational strain caused by dwindling cash reserves and persistently weak domestic travel demand.
In its latest quarterly report released this Monday, Spirit detailed the challenging market conditions, including elevated domestic capacity and a tough pricing environment for leisure travel in the second quarter. The airline anticipates these financial pressures will continue throughout the remainder of the year, contributing to significant operational uncertainty.
To conserve cash, Spirit had already announced in July that it would furlough approximately 270 pilots and demote an additional 140. Further compounding its challenges, Spirit revealed this Monday that its credit-card processor has demanded the airline set aside more funds as collateral, threatening to terminate its contract which is due to expire on December 31.
Spirit Airlines had previously filed for bankruptcy protection in November 2024, becoming the first major U.S. carrier to do so since 2011, following years of losses and failed merger attempts. It successfully exited bankruptcy in March 2025 after a court-approved restructuring plan.
To address the renewed liquidity concerns and mitigate the risk of not meeting minimum liquidity covenants, Spirit announced plans to bolster its cash position. These measures include the sale or monetization of aircraft and real estate, alongside shedding excess airport gate capacity. The outcome of ongoing discussions with stakeholders and the effectiveness of these plans will be crucial in determining the airline’s ability to operate over the next 12 months.
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