Spirit Airlines is in trouble. In an Aug. 11 regulatory filing, the company warned of a potential closure within 12 months if financial results don't improve.
And though management sought the following day to assuage staff fears of an imminent grounding of the discount carrier, some analysts said they aren't sure Spirit will last even as long as another year.
"If you need to sell your headquarters, that is definitely a bad sign," said Bloomberg Intelligence aviation industry analyst Francois Duflot, referencing Spirit's statement that it intends to take additional measures to bolster liquidity, potentially including the sale of real estate, aircraft and excess gate capacity.
Brett Snyder, an industry analyst who authors the Cranky Flier blog, honed in on Spirit's disclosure that its credit card processing company is requesting additional collateral as a condition for renewing their agreement at the end of the year, which would further draw into the carrier's diminishing cash reserves.
"I'd be amazed if the airline made it into 2026," Snyder wrote in an Aug. 14 column. "In fact, I don't see how it can even get that far with the cash burn that it has right now."
Cash, indeed, is the cause off all the angst. Spirit entered 2025 in the midst of Chapter 11 bankruptcy restructuring and with $902.1 million in unrestricted cash and cash equivalents. Although it emerged from bankruptcy in March having converted $795 million in debt to equity, the airline's cash and cash equivalents had dwindled to $407.5 million by June 30.
Spirit reported a second-quarter net loss of $245 million, a $184 million operating loss and a dismal operating margin of minus 18.1%.
Furthermore, Spirit said it expected the weak domestic leisure demand and challenging pricing environment that existed in Q2 to continue through the remainder of the year.
Since June 30, Spirit has bolstered its cash liquidity through the sale of 14 of the 32 spare engines it owns, for a total of $250 million. On its balance sheet, the airline also said that it has marked 21 aircraft, with a value of $449 million, for sale. Spirit is no longer using those planes, having slashed its flying by more than 27% over the past 12 months, an Aug. 18 Deutsche Bank analysis said.
Other assets available to the airline are its headquarters near Fort Lauderdale and 22 daily departure and landing slots at capacity-constrained LaGuardia airport, which Spirit says were valued at $83.5 million in March.
Duflot also said that Spirit owns 28 additional aircraft, though all are financed. The remainder of the carrier's fleet of 215 Airbus narrowbody planes are leased.
Despite Spirit's many challenges, CEO Dave Davis said in an Aug. 12 letter to staff that he's confident that his team can rebuild the airline.
"The report uses the phrase 'substantial doubt about the company's ability to continue as a going concern,'" he wrote about the Aug. 11 filing. "This is a phrase required by our outside auditors to convey that there is risk if we do not make changes. But, we are."
Indeed, Spirit is forging ahead with new revenue, merchandising and cost initiatives.
In June, the airline retrofitted 115 aircraft with seven rows of extra-legroom seats, part of its push to reach more premium leisure flyers with more upscale fare products. Alongside route cuts, the airline recently announced new destinations Key West, Belize City and Grand Cayman, all from Fort Lauderdale.
On the cost front, Spirit will demote approximately 140 pilots from captain to first officer on Oct. 1 and furlough approximately 270 pilots on Nov. 1 as it aligns staffing with schedule cuts.
Duflot stopped short of saying that Spirit is doomed.
"As long as somebody is willing to add cash, I think they can survive," he said. "But you need to have enough demand to meet supply. For the foreseeable future, you may have more supply than demand."
What about Frontier?
During Spirit's bankruptcy proceedings over the winter, discount competitor Frontier made two bids for the airline, but both were rebuffed by Spirit management as insufficient.
With Frontier still dealing with losses of its own, Duflot said he doesn't expect another offer. Frontier, he said, more likely would hope to see Spirit fail to overcome its challenges. That seems to be what Frontier CEO Barry Biffle is thinking. During Frontier's Aug. 5 earnings call, Biffle said he expected Frontier "to be last man standing in the low-cost space next year."
Other U.S. airlines -- Duflot mentioned United -- might also choose to hurt Spirit with selective capacity additions in the coming months in order to kill it off.
Meanwhile, as Spirit sells off more assets, its resilience will diminish.
"When you sell everything that you own, you don't have anything left for any rainy day in the future," Duflot said.