Spirit Airlines Files for Bankruptcy: What Went Wrong?

Spirit Airlines, one of the biggest names in the U.S. budget airline market, filed for Chapter 11 bankruptcy on November 18, 2024. Known for its ultra-low fares and no-frills service, the airline has been the go-to choice for travellers seeking cheap flights. But rising costs, fierce competition, and mounting debt have backed Spirit into a financial corner. 

Why is Spirit encountering financial turbulence?

1. The Money Did Not Add Up

Even though travel demand has bounced back after the pandemic, Spirit struggled to turn this into profitability. Rising fuel prices, increased labour costs, and the expenses of maintaining a fleet of modern aircraft are expensive. While other airlines have found ways to adapt, Spirit’s razor-thin profit margins have left it with little room to manoeuvre.

2. Tough Competition

Spirit is not the only low-cost game in town. Airlines like Frontier and Southwest have been battling it out to attract the same cost-conscious travellers. Meanwhile, traditional carriers like Delta and American Airlines have also started offering cheaper, basic economy tickets, making it harder for low cost carriers to stand out in the market. Adding this to complaints about cramped seats, delays, extra fees, and the consumers’ poor impression of the company, many passengers may choose to fly with other airlines. And although many of these concerns are common among low-cost options, Spirit has a history of consistently ranking low in airline customer satisfaction surveys, giving travellers yet another reason to think twice about flying with them.

3. Debt Caught Up With Them

To grow quickly, Spirit borrowed big. The airline expanded its fleet, added new routes, and took risks to secure its spot in a crowded market. However, as costs rose and revenue failed to keep up, paying off that debt became increasingly difficult, and filing for bankruptcy became the only way to hit the reset button.