Spirit Airlines’ battle for survival: Travel Weekly

Spirit Airlines is in bother. In an Aug. 11 regulatory submitting, the corporate warned of a possible closure inside 12 months if monetary outcomes do not enhance.

And although administration sought the next day to assuage employees fears of an imminent grounding of the low cost service, some analysts stated they are not positive Spirit will final even so long as one other yr. 

“If you need to sell your headquarters, that is definitely a bad sign,” stated Bloomberg Intelligence aviation trade analyst Francois Duflot, referencing Spirit’s assertion that it intends to take further measures to bolster liquidity, doubtlessly together with the sale of actual property, plane and extra gate capability.

Brett Snyder, an trade analyst who authors the Cranky Flier blog, honed in on Spirit’s disclosure that its bank card processing firm is requesting further collateral as a situation for renewing their settlement on the finish of the yr, which might additional draw into the service’s diminishing money reserves.

“I’d be amazed if the airline made it into 2026,” Snyder wrote in an Aug. 14 column. “In fact, I don’t see how it can even get that far with the cash burn that it has right now.” 

Cash, certainly, is the trigger off all of the angst. Spirit entered 2025 within the midst of Chapter 11 chapter restructuring and with $902.1 million in unrestricted money and money equivalents. Although it emerged from chapter in March having transformed $795 million in debt to fairness, the airline’s money and money equivalents had dwindled to $407.5 million by June 30. 

Spirit reported a second-quarter internet lack of $245 million, a $184 million working loss and a dismal working margin of minus 18.1%. 

Furthermore, Spirit stated it anticipated the weak home leisure demand and difficult pricing atmosphere that existed in Q2 to proceed by way of the rest of the yr. 

Since June 30, Spirit has bolstered its money liquidity by way of the sale of 14 of the 32 spare engines it owns, for a complete of $250 million. On its stability sheet, the airline additionally stated that it has marked 21 plane, with a worth of $449 million, on the market. Spirit is not utilizing these planes, having slashed its flying by greater than 27% over the previous 12 months, an Aug. 18 Deutsche Bank evaluation stated.

Other belongings obtainable to the airline are its headquarters close to Fort Lauderdale and 22 each day departure and touchdown slots at capacity-constrained LaGuardia airport, which Spirit says had been valued at $83.5 million in March. 

Duflot additionally stated that Spirit owns 28 further plane, although all are financed. The the rest of the service’s fleet of 215 Airbus narrowbody planes are leased. 

Despite Spirit’s many challenges, CEO Dave Davis stated in an Aug. 12 letter to employees that he is assured that his crew can rebuild the airline. 

“The report uses the phrase ‘substantial doubt about the company’s ability to continue as a going concern,'” he wrote concerning the Aug. 11 submitting. “This is a phrase required by our outside auditors to convey that there is risk if we do not make changes. But, we are.”

Indeed, Spirit is forging forward with new income, merchandising and price initiatives. 

In June, the airline retrofitted 115 plane with seven rows of extra-legroom seats, a part of its push to succeed in extra premium leisure flyers with extra upscale fare merchandise. Alongside route cuts, the airline not too long ago introduced new locations Key West, Belize City and Grand Cayman, all from Fort Lauderdale. 

On the associated fee entrance, Spirit will demote roughly 140 pilots from captain to first officer on Oct. 1 and furlough roughly 270 pilots on Nov. 1 because it aligns staffing with schedule cuts.

Duflot stopped in need of saying that Spirit is doomed. 

“As long as somebody is willing to add cash, I think they can survive,” he stated. “But you need to have enough demand to meet supply. For the foreseeable future, you may have more supply than demand.”

What about Frontier?

During Spirit’s chapter proceedings over the winter, low cost competitor Frontier made two bids for the airline, however each had been rebuffed by Spirit administration as inadequate.

With Frontier nonetheless coping with losses of its personal, Duflot stated he would not count on one other supply. Frontier, he stated, extra seemingly would hope to see Spirit fail to beat its challenges. That appears to be what Frontier CEO Barry Biffle is pondering. During Frontier’s Aug. 5 earnings name, Biffle stated he anticipated Frontier “to be last man standing in the low-cost space next year.” 

Other U.S. airways — Duflot talked about United — may also select to harm Spirit with selective capability additions within the coming months in an effort to kill it off. 

Meanwhile, as Spirit sells off extra belongings, its resilience will diminish. 

“When you sell everything that you own, you don’t have anything left for any rainy day in the future,” Duflot stated.