Bankruptcy Encore: Spirit Airlines Flies Through Chapter 11

If you feel like you've seen this headline before, you're not wrong. Spirit Airlines—the bright-yellow budget carrier known for low fares (and even lower legroom)—has filed for Chapter 11 bankruptcy again. This marks its second trip down that runway in less than a year.

The filing was made by Spirit Aviation Holdings, the parent company, at the U.S. Bankruptcy Court in New York on August 28. But before you panic about your $49 fare to Orlando: Spirit says all flights will continue as scheduled. Yes, your boarding pass is still valid, and no, they're not charging extra for turbulence (yet).

What Went Wrong This Time?

Spirit's CEO, Dave Davis, admitted that the first restructuring, which wrapped up just this March, didn't go far enough. Yes, it reduced its debt and brought in fresh cash, but the deeper issues still remained unsolved. Spirit still can't shake its old problems—stretching its network too thin, costs climbing higher than its planes, and trying to convince travelers to pay extra for "Big Front Seats." In an economy where people still see Spirit as the cheapest ticket in town, convincing them to pay extra must have been difficult and financially draining.

"Since emerging from our previous restructuring... it has become clear that there is much more work to be done," Davis said.

What's the Plan?

This Chapter 11 round is supposed to give Spirit the breathing room (and runway space) to:

• Redesign the network: Spirit will now lean harder into focus cities where flights are always packed and quietly back out of places where planes are flying half-empty.
• Rethink costs: Spirit can no longer keep selling $50 tickets if behind the scenes it's burning cash on fuel, staff, or maintenance. So Spirit has to keep its own expenses super low to make cheap tickets possible. It plans to keep its costs low by running the business more efficiently. This includes putting some pilots on temporary leave and cutting a few positions to match expected flight demand.
• Add more premium touches: It means Spirit isn't suddenly becoming a luxury airline (like Emirates with free champagne and lie-flat beds). Instead, they're just adding small upgrades like Spirit First, Premium Economy, and Value options.

The Fine Print

Spirit Aviation Holdings says it owes somewhere between $1 billion and $10 billion to between 25,001 and 50,000 creditors. Ouch. Its biggest unpaid bills include: $136 million to the U.S. Treasury (on an unsecured loan).

Additionally, Spirit's restructuring plan included converting $795 million of debt into equity and securing a $350 million equity investment from existing investors. The airline also entered into a new $275 million revolving credit facility to support its operations during the bankruptcy process.

Not only Spirit Airlines but also four smaller companies it owns have filed for bankruptcy. Only one difference: those companies are registered in the Cayman Islands, a place known for tax benefits and offshore finance. Well, even bankruptcies get a fancy touch when offshore companies are involved.

Déjà Vu in the Skies

This isn't Spirit's first rodeo. Back in November 2024, it filed for Chapter 11, then reemerged in March 2025 with less debt and new capital. Even though Spirit tried to fix things after its last bankruptcy, new problems kept coming one after another, like passengers being added to an already overfull plane. And now, those problems have built up so much that Spirit has to go through bankruptcy again.

What This Means for Travelers

For now, nothing changes. Spirit's planes will keep flying across the U.S., Caribbean, and Latin America; tickets are still good; and those neon-yellow jets aren't going anywhere but up in the air, taking you to your next vacation.

So, while Spirit figures out how to keep its balance sheet from nosediving, passengers can sit back, buckle up, and enjoy the no-frills ride.

Curious what else is going up in the skies? Read our other stories on lawsuits, airline strikes, and travel news that actually matters.