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Spirit Airlines has reached a deal with its creditors that will allow the struggling budget carrier to exit bankruptcy and stay in business — but as a much smaller airline than it once was.
The airline announced Tuesday (February 24) that it struck an agreement in principle with creditors to emerge from Chapter 11 bankruptcy protection later this spring or early summer. The deal keeps Spirit alive after years of mounting losses and two bankruptcy filings, avoiding what many feared would be a complete shutdown.
"Spirit will emerge as a strong, leaner competitor that is positioned to profitably deliver the value American consumers expect at a price they want to pay," CEO Dave Davis said in a statement.
Spirit first filed for bankruptcy in November 2024, then filed again in August 2025 after losing nearly $257 million in just a few months following its first exit from Chapter 11. The airline had repeatedly warned investors there was "substantial doubt" it could stay in business.
The carrier was hit hard by a massive engine recall from Pratt & Whitney, a sharp shift in consumer demand toward more premium travel experiences, and a failed merger with JetBlue Airways that a federal judge blocked in January 2024, ruling it would violate antitrust laws and drive up fares for passengers.
Under the new plan, Spirit will shrink significantly. The airline's total debt and lease obligations will be cut from $7.4 billion down to $2.1 billion. Fleet costs will drop an additional $550 million — a 65% reduction from before its most recent bankruptcy filing. The airline is also targeting $300 million in additional non-fleet cost savings.
Spirit plans to operate mostly older Airbus aircraft and will focus flights on high-demand travel periods and popular routes. This coming summer, the airline will offer nearly 40% fewer flights and seats compared to the same period in 2024, according to aviation analytics firm Cirium.
The airline also plans to expand its Spirit First and premium economy seating options and update its loyalty program in a bid to attract more passengers.
Spirit's attorney, Marshall Huebner of Davis Polk, told the U.S. Bankruptcy Court on Tuesday (February 24) that secured lenders will make additional cash available to Spirit as part of the deal. He also hinted that future merger talks could still happen once the airline is on more stable ground, saying the emergence "will allow Spirit to do many things from a position of strength and stability, including to consider potential future industry transactions."
Spirit previously held deal talks with Frontier Airlines and investment firm Castlelake during its second bankruptcy, though neither deal came together. The airline will remain an independent carrier under the current plan.
Huebner acknowledged the road ahead is difficult, saying, "Because every single day counts, and every single dollar counts, the airline industry is just as competitive today with this deal in hand as it was last Friday."