The bright yellow livery of Spirit Airlines may soon disappear from the skies. The country’s seventh-largest airline has been in financial trouble for years: It hasn’t turned a profit since 2019 and filed for bankruptcy twice in the last two years. Despite all that, its leaders predicted that the airline could exit bankruptcy and return to profitability as early as 2027. It just needed time and a little stability to do so.
That time may have run out. On Monday, April 20th, Spirit approached the government to ask for a federal bailout. The sudden rise in fuel prices caused by the war in Iran will add an estimated $360 million in unexpected costs to its balance sheet this year. Spirit’s executives appear to believe that the airline may run out of cash soon unless it gets outside help.
In public, the Trump administration appears skeptical that a bailout is the right solution. In a Tuesday interview with Reuters, Transportation Secretary Sean Duffy questioned whether a bailout would simply “put good money after bad” and “forestall the inevitable.” Trump himself also appeared to favor a merger rather than a bailout. “I don’t mind mergers. I’d love somebody to buy Spirit,” he said on Tuesday’s episode of Squawk Box. “It’s 14,000 jobs.”
Trump appears skeptical that a bailout is needed
Behind closed doors, however, their strategy is very different. On Wednesday morning The Wall Street Journal reported that the government was proposing a $500 million loan to Spirit in exchange for a “potential significant stake” in the airline.
Senators from both parties criticized the proposal. “The government doesn’t know a damn thing about running a failed budget airline,” Sen. Ted Cruz (R-TX) posted on X. “This is an absolutely TERRIBLE idea.”
“What do the American people get out of this taxpayer bailout?” asked Sen. Elizabeth Warren (D-MA). “Will the failed airline executives be held accountable?” Warren has a point. The fuel crisis is affecting the whole airline industry. Why is Spirit the only airline that has been pushed to the brink?
The answer is a mix of bad economics, bad strategy, and plain bad luck. As an ultra-low-cost carrier (ULCC), Spirit can’t take the approach of other airlines such as United and Delta that are raising fares and adding fees. Delta alone projects $2 billion in additional fuel expenses this year that it has to offset by increasing its prices across the board.
Spirit’s business model targets price-sensitive flyers who care only about the lowest possible fare. Its prices are routinely 40 percent lower than those of legacy airlines. Raising them might earn a little bit of extra money per seat, but it would certainly price out the more than 100 million passengers who fly ULCCs every year just for the low costs.
This was a profitable strategy for much of the airline’s history.
“For families in particular, it made a lot of sense to try to find something that was super inexpensive,” said Mike Barger, one of JetBlue’s original cofounders, who now teaches business at the University of Michigan. “The business model wasn’t a bad idea back in the late ’90s, early 2000s.”
In late 2019, Spirit bet that the value-seeking end of the market would keep growing. So it aggressively expanded to better compete with legacy airlines. It took on $4 billion in debt to lease 70 new airplanes and add 43 new destinations to its network.
Then came covid. The aviation industry collapsed in 2020, months after Spirit was locked into its multibillion-dollar lease agreements. It took four years for domestic travel to return to pre-pandemic levels. When it did, the recovery was asymmetric. Cost-conscious travelers simply didn’t fly like they used to, which hammered Spirit particularly hard.
By the end of 2025, Spirit airplanes were flying at only 75 percent capacity — far too little to sustain its low-price, high-volume business model. It entered a death spiral of issuing more debt to cover its operating costs, which grew as more airplanes came online, which required Spirit to issue more debt.
Then the engines on many of its new airplanes stopped working. Like many low-cost carriers, Spirit relies on a simplified fleet design for easy maintenance. Its Airbus A320neos all use the Pratt & Whitney PW1100G jet engine. In 2023, however, Pratt & Whitney announced a recall of 3,000-plus PW1100G engines due to a dangerous manufacturing defect. Overnight, nearly 20 percent of Spirit’s entire fleet was grounded. Many of those airplanes still have yet to return to service.
So when jet fuel prices soared from $2.18 a gallon in January to nearly double that as of this writing, it added unsustainable costs to the airline’s shaky finances. On a typical day, Spirit’s fleet requires more than 1 million gallons of fuel to operate. The airline, which had only $705 million cash on hand as of February, literally cannot afford gas.
Spirit has been trying to find solutions to its deteriorating finances for several years. It attempted a merger with JetBlue in 2022. This was blocked on antitrust grounds in 2024, even though the combined company would only have a 9 percent market share and had a largely complementary route structure. In January 2025, Frontier offered to buy Spirit outright. That offer was rejected by Spirit shareholders.
“The argument JetBlue was making is that, ‘Look, do we want Spirit to go away or do you want to at least give us collectively a chance to fight it out to keep fares low?’” said Berger. “Doubling your size and adding all those assets and people does put you in a better position to compete.”As a last resort Spirit entered Chapter 11 bankruptcy in August 2025 — the first major airline in a decade to do so. Under the terms of its restructuring it has cut capacity, exited more than 200 unprofitable routes, furloughed employees, and canceled some of its airplane leases.
This has taken almost $5.4 billion of debt off its books since last year. But the airline still isn’t profitable. In 2025 it posted a $2.7 billion annual loss.
The Bloomberg article and subsequent coverage prompted Spirit’s management to email all of its employees last Friday.
“Like many of you, we have seen recent media coverage speculating about Spirit’s future,” they wrote. “We have heard these rumors before. Like then, we shouldn’t allow speculation, especially from unnamed sources, to distract us from delivering for our Guests and each other.”
They did not explicitly deny the rumor that the airline was on the brink of insolvency, however. (Spirit Airlines did not respond to a request for further comment.) If Spirit disappears, domestic aviation will shrink by 5 percent almost overnight. Millions of people may lose affordable access to the sky.
“Spirit has a place in the market,” said Barger. “It has an effect on prices for the routes they fly. Their customers won’t jump over to an American or a Delta.”
And even those who prefer legacy carriers might find their wallets a little lighter in its absence of Spirit. A 2013 MIT study found that whenever Spirit entered a new market, fares in that market decreased by an average of $20 per segment.
So make fun of Spirit Airlines all you want — we’ve all done it at some point — but don’t be too quick to cheer its demise. You’re going to miss it when it’s gone.
