Spirit Airlines is at risk of liquidation as surging jet fuel prices and tensions in the Middle East have added further challenges to the bankrupt carrier. Decisions to liquidate and sell off its assets could come as early as this week, sources say, citing those familiar with the matter.
The low-cost carrier has had plans to exit Chapter 11 this summer, after reaching an agreement on core terms of a restructuring support agreement with its existing DIP lenders and secured noteholders.
The airline had laid out its strategy moving forward in February, stating that it would operate with a focus on routes with stronger consumer demand, expand its premium offerings, and achieve a stronger balance sheet, shaving off approximately $5 billion in debt.
“We don’t comment on market rumors and speculation,” Spirit stated.
Airlines across the industry have grappled with soaring fuel prices over the past month. American, Delta, and United all reported approximately $400 million in added costs in March.
Fuel is the second-largest cost for airlines behind labor, and the volatile environment has put a dent in its hopes to emerge from Chapter 11.
In the meantime, Spirit’s core issues, such as passengers willing to pay more for premium experiences, its poor branding, and its limited ability to capture consumer loyalty, have persisted despite its plans to exit bankruptcy.
The airline had attempted to merge with other carriers in recent years, including an agreement to be acquired by JetBlue Airways, but was blocked on antitrust grounds by the Biden administration.
The industry has since seen growing chatter on consolidation again as geopolitical uncertainty rains on airlines. JetBlue is reportedly interested in selling itself to a competitor, and United Airlines Chief Executive Officer has held talks with President Donald Trump on acquiring rival American Airlines.
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