What caused issues for Spirit Airlines?

Since 2019, Spirit Airlines has not had a profitable year and has lost over $2 billion since 2020, leading to the airline filing for Chapter 11 bankruptcy protection in November.

How did it get here?

Despite the devastating impact of the Covid-19 pandemic on all airlines, Spirit's financial troubles did not end there. The airline industry has faced supply chain problems and rising costs, including higher wages for its tens of thousands of employees. To make matters worse, Spirit has also faced an engine recall grounding dozens of its jets, weaker-than-expected sales, and a failed merger with Frontier Airlines.

With the pandemic, travelers' preferences have shifted, with many consumers willing to pay more for additional space on board or luxurious airport lounges, according to airline executives. Low-cost carriers like Ryanair and EasyJet have faced increased competition from legacy airlines like Delta and United, who have introduced basic economy fares and segmented cabins to cater to a wider range of price points, from affordable tickets to first-class seats that can cost up to six figures.

Spirit Airlines, facing mounting losses and impending debt payments, furloughed hundreds of pilots and offered buyouts to salaried workers. Additionally, it sold some of its Airbus fleet and cut routes. Eventually, the airline filed for bankruptcy protection on November 18.

Spirit Airlines will continue to operate as usual while going through bankruptcy, which it anticipates ending in the first quarter of 2025. It is predicted that the airline will emerge from the process as a smaller airline with fewer routes, according to analysts.

Watch the video to learn more about what went wrong.