Sources say Spirit Airlines could go into liquidation as early as this week

Spirit Airlines could liquidate as early as this week, according to people familiar with the matter.

They spoke on condition of anonymity to discuss matters that have not yet been announced.

The low-cost carrier is struggling to recover from its second bankruptcy in less than a year, but now faces the added challenge of rising fuel prices. Fuel is airlines’ largest expense after labor.

“We do not comment on market rumors and speculation,” Spirit said in a statement.

The exact day the carrier could begin liquidation — or whether it would end up taking that route — was not immediately clear. Bloomberg previously reported about the possible liquidation.

The news comes as the US airline industry, including Florida-based Spirit, wraps up the busy spring holiday season.

Pilot and flight attendant unions have made concessions in recent months in an attempt to help Spirit survive. The airline had planned to scale back and focus on travel times and high-demand routes in an attempt to emerge from bankruptcy as early as this spring.

If fuel remains at about $4.60 a gallon this year, Spirit’s expected operating margin for fiscal 2026 will fall from negative 7 percent to negative 20 percent, JPMorgan said last week in a note. Spirit could face another $360 million in costs, more than its $337 million cash balance as of the end of last year, JPMorgan airline analyst Jamie Baker wrote.

The price of jet fuel averaged $4.88 a gallon in New York, Houston, Chicago and Los Angeles on April 2, according to Argus, up about 95% since the Iran war began on February 28.

As Spirit’s situation becomes more difficult, competitors have added flights to some of its destinations. Frontier Airlines and JetBlue Airlines The banks have the most overlap in the current quarter, with their ability to “go head-to-head with Spirit” at roughly 32% and 21%, respectively, Deutsche Bank analyst Michael Linenberg said in a note Thursday.

Spirit has enjoyed largely consistent profitability for years and the most enviable margins in the industry. But things took a turn after the pandemic, when wages and other costs rose, customer preferences changed, and an oversupply of domestic flights depressed airfares, which was particularly punishing for U.S.-focused airlines that don’t have a buffer of plush first-class cabins, credit card deals and big loyalty programs.

Its problems worsened after a Pratt & Whitney engine recall led to the grounding of dozens of its Airbus planes starting in 2023 and a planned acquisition by Pratt & Whitney. JetBlue Airlines It was banned two years ago by a federal judge who ruled it was anticompetitive, leaving both companies to fend for themselves against a backdrop dominated by larger carriers.

Spirit expected to make a net profit of $252 million last year, according to a December 2024 court filing, but said in an August report that it lost nearly $257 million in a period of months extending from March 13, after it emerged from its first Chapter 11 bankruptcy, through the end of June. It filed for Chapter 11 bankruptcy protection again less than a month later.

The airline has tried in recent years to attract high-spending customers by offering more spacious seats or bundled fares that include seat and baggage allocation to better compete with larger rivals whose profits boosted big-spending customers after the pandemic.