A lawyer for Spirit Airlines announced on Tuesday that rising jet fuel costs left the company with “no option” but to declare bankruptcy. The airline plans to halt its operations over the weekend while seeking court approval to sell off assets and pay bonuses to remaining staff.
Marshall Huebner, representing Spirit, stated at a press conference that during a recent court session, the airline learned that a proposed $500 million bailout from the Trump administration wouldn’t proceed, largely due to pushback from certain creditors.
He expressed regret to customers and the public, highlighting that Spirit had been attempting to reduce its operations prior to the announcement, noting that the airline successfully transported 50,000 passengers the previous Friday.
Earlier this year, Spirit had aimed to exit bankruptcy for the second time but found that its cost estimates were significantly disrupted by the onset of the Iran war, which caused a spike in oil prices. This, in turn, sent jet fuel prices soaring beyond the airline’s control.
Spirit is currently requesting court permission to expedite asset sales and secure retention bonuses for employees who choose to stay through the downsizing process. These bonuses average around $76,000 each, with higher amounts reportedly available for top executives, although those figures haven’t been specified. Meanwhile, the U.S. Trustee from the Department of Justice has raised concerns regarding the bonuses.
With mounting fuel costs—around $100 million since March 1—the airline is now concerned that continuing operations would incur even greater expenses in the coming months. The court has been asked to approve a $10.7 million retention bonus package for employees remaining during this transition.
In light of the financial situation, Spirit expressed worries about lacking the funds to organize the auction of its aircraft and equipment. They are seeking court approval to either arrange quick sales or surrender the equipment to lenders for repossession.
As operations ceased on Saturday, all flights were canceled, and the airline immediately began reducing its activities. Customers who booked directly through Spirit using credit or debit cards will be refunded automatically. Most refunds were processed by Saturday evening; however, some may take a bit longer to show up in accounts. Passengers who bought tickets through third-party sellers should reach out to those sellers for refunds.
Travelers who used vouchers, travel credits, or loyalty points may face a more complicated situation, as these claims will need to be addressed through Spirit’s bankruptcy proceedings.
