Spirit Airlines is shrinking after its second 2025 bankruptcy to better compete with Delta and United as market dynamics are changing. CFO Fred Cromer, during a virtual creditor meeting, that the airline will reduce its fleet from 214 to 100 aircraft, a little over half of its fleet.Â
Fleet ReductionsÂ
The carrier  filed a motion in bankruptcy court on October 3rd to reject leases on 87 aircraft, including 19 A320ceo, 65 A320neo, and 3 A321neo aircraft, all scheduled for surrender before the end of October with court approval. The airline previously agreed to return 27 aircraft to lessor AerCap, including 19 A320neo and 8 A321neo aircraft.
These two actions will remove 114 of the carriers 214 aircraft, including models currently in high demand. We expect the lessors are already lining up replacement customers and planning for the refit and transition to future customers.
Interim Financing and Operational Changes
The carrier has arranged for $475 million in Debtor in Possession (“DIP”) financing with $200 million to become available upon court approval in a hearing scheduled for later this week. Spirit also obtained additional access to $120 million in cash collateral to maintain operations.
Operationally, Spirit plans to suspend 40 routes to account for a 25% capacity reduction year over year in November. The carrier is shrinking service to zero from 15 cities, and cutting staff in its restructuring process.
About 1,800 flight attendants, about one-third of the total, effective December 1st. Similarly, 270 pilots were furloughed effective October 1st, with an additional 140 captains demoted to first officers on November 1st.
Spirit’s Challenges
The carrier suffered from the Pratt & Whitney GTF engine issues, with 38 aircraft currently grounded for engine inspections. Industry overcapacity and weak passenger demand, with significant price competition, have left the carrier in trouble. Delta and United have better managed their low-far capacity and their mix of higher yield traffic to competitive advantage, forcing Spirit to feed on lower fare customers and insufficient yields. The outlook, especially with a second bankruptcy in 2025, doesn’t look promising.
The Bottom Line
As we’ve seen over the years, airlines take a long time to die. How many airlines do you know that have been successful shrinking their way back to profitability in an industry that depends on economies of scale? In my nearly 50 years in aviation, I can’t remember any. But I do remember PanAm, Eastern, Braniff, TWA and others seeing debt and difficulties mount as their operations shrunk in bankruptcy, or multiple bankruptcy, filings as we’ve seen here. The numbers don’t seem to add up to a future for Spirit.
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