Budget airline Spirit could be on the brink of liquidation, sources told multiple media outlets this week.
The financially troubled carrier has been restructuring its operations and initially expected to exit Chapter 11 bankruptcy some time this spring or summer, with a smaller, more economical fleet and a new pilot contract meant to contain labor costs. But the rising price of jet fuel has complicated that picture, the sources said, and discussions with the airline’s creditors now include the possibility of liquidation.
Bloomberg was first to report the development, with CNBC later reporting that Spirit could liquidate as soon as this week. The business news channel also cited unnamed people with knowledge of the matter.
In a statement, Spirit said it would not comment on “market rumors and speculation.”
Climbing fuel prices have affected airlines of every size and market level, but they could prove particularly damaging to ultra-low-cost carriers such as Spirit, who must carefully manage every expense to stay in the black. According to the International Air Transport Association, aviation fuel prices have doubled globally since the start of the conflict in Iran.
Spirit filed for bankruptcy protection in August 2025 in the face of climbing costs and ballooning debt, some of which was carried over from its prior stint in Chapter 11 protection. It has laid off corporate staff, furloughed pilots and flight attendants, canceled routes, pulled out of certain markets, and sold off aircraft in an effort to reduce spending.
Despite frequent media reports that the carrier was on the verge of collapse, Spirit appeared to be on the upswing in recent months. It canceled and reversed some employee furloughs, and negotiated a new contract with its pilots’ union that implemented temporary pay cuts and put off raises until 2028.
In February, the airline announced it had reached a deal with its creditors that would allow it to exit bankruptcy protection by the late spring or early summer. The plan envisions a much smaller version of Spirit, with fewer aircraft and routes.
