Budget airline Spirit Airlines has warned that it may not survive another year due to financial struggles. The airline’s share price plummeted, and competitors like Frontier soared, leading analysts at Raymond James to predict that rival airlines could raise ticket prices if Spirit goes under.
Spirit filed for bankruptcy last November but exited the process in March. Despite this, the airline continues to report losses, totaling $245.8 million in the second quarter of this year. The company has expressed “substantial doubt” over its ability to continue as a going concern within 12 months.
Analysts believe that Spirit’s biggest competitors, Frontier, JetBlue, and Southwest, could be the most likely to increase fares if the airline collapses. Fares on routes where both Spirit and Frontier compete are typically 15% cheaper than those operated by only one of the two airlines.
Spirit’s share price fell by 40%, while its competitors rose: Frontier increased by 29%, JetBlue by 12%, and Southwest by 5%. Analysts had expected less volatility, as they did not see Spirit’s warning as a surprise.
The airline has cited weaker demand for domestic leisure travel as the reason for its financial struggles. The COVID-19 pandemic has led to a shift in consumer behavior, with travelers opting for premium options instead of budget-friendly fares.
Spirit is exploring ways to cut costs, including selling aircraft and gates at several airports. If it ceases operations, thousands of jobs would be at risk. The airline’s failed merger attempt with JetBlue also casts doubt on its future prospects. The government denied the merger due to antitrust concerns, citing the potential for Spirit to continue playing the “role” of consumer choice and competition with the majors.
Source: https://www.businessinsider.com/spirit-airlines-financial-bankruptcy-budget-flights-more-expensive-2025-8