USA’s Spirit expresses “substantial doubt” about ability to continue as a going concern

Just five months after emerging from Chapter 11, Spirit Aviation Holdings, the parent company of US budget airline Spirit Airlines, has issued a stark warning about its future.

In a filing with the US Securities and Exchange Commission, the company expressed “substantial doubt” about its ability to continue as a going concern over the next 12 months, citing a confluence of adverse market conditions and dwindling cash reserves. Spirit operates routes connecting key US cities with destinations popular among Irish holidaymakers.

The Florida-based airline, known for its distinctive yellow-liveried planes and no-frills service, has been grappling with financial turmoil since the Covid-19 pandemic. By November 2024, Spirit had amassed losses exceeding €2.36 billion since 2020, prompting a Chapter 11 bankruptcy filing—the first by a major US airline since 2011.

Emerging from bankruptcy in March 2025, the carrier restructured €749 million of debt into equity and secured new financing to bolster operations. However, the latest filing reveals that these measures have not stemmed the tide of financial challenges. Spirit reported a net loss of €231 million for the second quarter of 2025, up from €182 million in the same period last year, with operating revenues falling to €960 million from €1.2 billion.

Adverse market conditions, including an oversupply of domestic US flights and weak demand for leisure travel, have created a challenging pricing environment. Spirit noted that these trends are expected to persist through 2025, further straining its liquidity. The airline’s credit card processor has demanded additional collateral to renew its agreement, set to expire on 31 December, which could significantly reduce Spirit’s cash reserves.

To address this, the company is exploring asset sales, including aircraft, real estate, and airport gate slots, alongside cost-cutting measures such as Indicators have included furloughs of approximately 270 pilots starting 1 October and the downgrading of 140 captains to first officers from 1 November, aligning staffing with a reduced flight schedule projected for 2026.

The airline’s attempts to pivot towards premium offerings, such as tiered pricing with enhanced amenities, have yet to yield sufficient revenue to offset losses. Previous merger attempts with competitors like JetBlue and Frontier fell through, leaving Spirit to navigate its financial straits independently. Chief Executive Dave Davis reassured employees and customers that no immediate shutdown is planned and that booked tickets remain valid, but the airline’s future hinges on securing new financing or a buyer.

Spirit’s relatively young fleet could attract acquisition interest, though no deals are currently in discussion. The carrier has already reduced capacity by over one million seats compared to last year and added new destinations like Belize and the Cayman Islands in a bid to diversify revenue streams. However, ongoing issues with Pratt & Whitney engine groundings and a broader economic slowdown affecting budget travel demand pose significant hurdles.

As Spirit Aviation Holdings races to stabilise its finances, the coming months will be critical. Failure to meet liquidity requirements could trigger defaults, potentially forcing the airline back into restructuring. For now, Spirit remains operational, but its warning underscores the precarious state of the budget airline sector in a post-pandemic world.