One of America’s largest airlines has ceased operations, leaving passengers stranded at airports and 14,000 workers without jobs.
Benedict Brook in the US
One of America’s largest airlines has shut down after a rescue deal mulled over by Donald Trump fell through.
Spirit Airlines, a low-budget carrier that operated in the US for 34 years, has announced it will begin an “orderly wind-down of operations, effective immediately”.
“All Spirit flights have been cancelled and Spirit guests should not go to the airport,” the airline said in a statement.
Spirit passengers have been turning up at airports around the US to find empty check-in desks and signs advising them flights were cancelled and customer service was not available.
The collapse puts 14,000 Spirit staff out of work.
The airline blamed skyrocketing jet fuel costs — which have doubled since the start of the US-Iran war — and “other pressures on its business” for its demise.
However, it faced issues before the conflict, having gone bankrupt twice in a single year after struggling to bounce back from the Covid-19 pandemic.
“In March 2026, we reached an agreement with our bondholders on a restructuring plan that would have allowed us to emerge as a go-forward business,” Spirit president and chief executive officer Dave Davis said.
“However, the sudden and sustained rise in fuel prices in recent weeks ultimately has left us with no alternative but to pursue an orderly wind-down of the company.”Mr David said the company “does not have and could not procure” the hundreds of millions of dollars required to stay afloat.
“This is tremendously disappointing and not the outcome any of us wanted,” he added.
The US government had been considering a $500 million bailout for Spirit Airlines that fell through this week.
The US President said on Friday that “we’re looking at (the deal) but only if we can make a good deal”.
Other airlines have said they are preparing to help rescue Spirit passengers left in the lurch by its collapse.
The carrier, with its distinctive yellow livery, is the sixth largest American airline by passengers flown. It was one of the pioneers of ultra-low cost travel, with a similar business model to defunct Australian airlines such as Tiger and Bonza.
Its fleet size makes Spirit, founded in 1992, a similar size to Qantas.
Spirit has been plagued by problems for years.
Like all airlines, the pandemic led to major financial woes. The last time Spirit made a profit was in 2019, before Covid-19.
Since then, the once booming American low cost carrier market has suffered as larger airlines, such as Delta and United, began offering stripped back “basic economy” fares which attracted price sensitive flyers away from the likes of Spirit.
In recent years, its has parked planes, concentrated on fewer hub airports and shrunk to around half the flights it used to operate. That cuts costs but it also cut revenue.
A merger with rival JetBlue airlines – itself not in the best of financial health – was blocked by the Biden Administration over fears it would lessen competition.
Spirit has spent more than a year in bankruptcy protection to come up with a turnaround plan. It had hoped to come out of bankruptcy in March but that had to be cancelled when the US began bombing Iran
Spirit’s prospects haven’t been helped by the rising cost of jet fuel due to the conflict in the Middle East.
‘Good money after bad’
Recently, Spirit had been hoping to secure a $US500 million ($694m) bailout from the Trump Administration.
Spirit’s headquarters is in the Florida city of Fort Lauderdale which is just over an hour from Mr Trump’s Mar-a-Lago resort.
But while Mr Trump had seemed enthusiastic about an unprecedented intervention from the government, that now seems to be in doubt.
Spirit’s lenders were aghast at plans that could see the government jump ahead of them in the list of creditors and leave them worse off than if Spirit simply collapsed.
While some Republicans – and even those within the administration – are uncomfortable about rescuing an individual business and whether other struggling airlines will then come cap in hand too.
Indeed, just last week a consortium of low cost airlines asked for $2.5bn of funding from the US Government due to higher fuel costs.
US Transportation Secretary Sean Duffy said it would mean tossing “good money after bad”.
“There’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability,” he told Reuters.
“And so would we just forestall the inevitable and then own that?”
Mr Trump had suggested a bailout would leave the Federal Government owning 90 per cent of Spirit which it would then sell on for a profit. But analysts have questioned why competitors would buy Spirit in a few months given that none are keen to buy it now in a fire sale.
On Friday, US time, Mr Trump was asked if had turned his back on Spirit following his initial enthusiasm.
“It’s something we’re not looking to get involved with but, if we can, it’s 14,000 jobs,” he said.
“I would say we are driving a tough deal but it’s one of those things. We will do it or we won’t.
“We’re looking at it but only if we can make a good deal – no institution’s been able to do it”.
Mr Trump added that the White House had given Spirit “a final proposal”.
But it’s not clear what the proposal entails.
