Spirit Airlines announced Tuesday that it reached a deal with lenders that will allow it to exit bankruptcy by the late spring or early summer.
The low-cost carrier filed for its second bankruptcy in August 2025 amid mounting losses and dwindling cash reserves. Spirit first filed for Chapter 11 bankruptcy protection in November 2024 after unsuccessful merger talks with JetBlue and Frontier.
The airline will still face challenges under the deal, though it has a clearer path to survival after months of uncertainty, failed acquisitions and infighting amongst its creditors. Spirit has pushed to cut costs and build liquidity to avoid a liquidation scenario.
Spirit told the bankruptcy court that it expects to emerge from the process as a leaner airline that's focused on routes and time periods with the strongest demand, after cutting some of its high-cost aircraft leases and improving the utilization of its remaining fleet.
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The air carrier plans to tighten its network around higher-demand periods, boosting aircraft use on peak days while scaling back during off-peak days, while adjusting capacity to account for seasonal swings in air travel.
The company also plans to expand its premium seating options, including Spirit First and Premium Economy, and enhance its Free Spirit and co-brand loyalty programs that would allow it to preserve its low-fare positioning while driving repeat business.
Spirit projects that its total debt and lease obligations will decline under the bankruptcy deal from $7.4 billion before its Chapter 11 filing to about $2.1 billion when it exits bankruptcy.
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The deal could open the door to an acquisition in the future, as Spirit's lawyer said during a hearing on Tuesday that it could allow the company to weigh "potential future industry transactions" once the airline is stabilized.
Budget air carriers have faced headwinds from tepid leisure travel demand as well as fare pressure and excess capacity caused by competition from low-fare seats offered by legacy carriers.
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Earlier this month, Spirit announced a deal was reached pending court approval to sell 20 of its Airbus jetliners, most of which aren't currently in revenue service, to ease its financial woes.
The budget carrier said the fleet reduction wasn't expected to impact its flight schedule, and that they would be phased out of the fleet starting in April 2026.
Spirit also recalled 500 of the more than 1,300 flight attendants who were furloughed in December due to the company's financial problems.
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The Association of Flight Attendants-CWA, the union that represents Spirit flight attendants, said in a statement posted to X that they will be recalled in order of system seniority, with those involuntarily furloughed first.
Reuters contributed to this report.
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