U.S. travel is apparently booming.
A recent TSA report showed that the agency screened a record 3.1 million passengers in a single day this June, with Labor Day bringing another historic rush.
On the flipside, the party hasn’t nearly been as fun for the budget crowd. Costs have surged. Case in point, Frontier’s Q2 cost per available seat mile (CASM) jumped 8% to 9.73 cents.
Similarly, Pratt & Whitney engine inspections have sidelined dozens of A320neos across carriers, severely impacting efficiency.
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Spirit Airlines FLYYQ has been hit the hardest. Following years of growing losses and sluggish demand on key routes, it filed for bankruptcy again on August 29, its second in under a year. It now finds itself scrambling to restructure and realign.
Now, a fresh bombshell from United Airlines ( (UAL) ) CEO Scott Kirby spells even deeper trouble with a remark that, if proven right, may prove to be a death knell for the low-cost pioneer.
Scott Kirby drops his latest sharp view on low-cost carrier Spirit Airlines’ future
Scott Kirby drops blunt verdict on Spirit’s future
United Airlines boss Scott Kirby isn’t mincing words when it comes to his views on budget rival Spirit Airlines.
Speaking at an industry conference, Kirby predicted that the ultra-low-cost carrier will likely go out of business.
When asked why he believed that, Kirby’s reply was cutting: “Because I’m good at math.”
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Spirit, filed for bankruptcy in August for the second time, and has had it rough clawing back market share on the back of weak demand and growing losses.
The airline’s reliance on rock-bottom fares, along with fees for almost everything else, has been subject to a ton of customer frustration. Kirby took aim at that strategy, calling it unsustainable.
“You can’t have a business model that customers hate. You can’t have a business model predicated on ‘screw the customer,’” he said.
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For investors, Kirby’s comments underscore a growing theme that the budget model, which once looked incredibly disruptive, is no longer viable. If Spirit can’t turn things around, consolidation or liquidation will reshape the U.S. airline space.
Why Spirit filed again at a glance
Spirit Airlines has spent the past year fighting what many consider a losing battle with rising expenses, shrinking liquidity, and a fare/fees model that’s just not pulling its weight.
After emerging from Chapter 11 in March, the company warned on August 12 that it might not be able to continue operating without a massive turnaround.
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Credit ratings slid deeper into the red, with its unrestricted cash hovering near $408 million at the end of Q2, and its management fully drew a $275 million revolver.
By August 29, Spirit returned to Chapter 11 in SDNY, forecasting a hefty $179 million cash burn in its new case’s first month while pointing to lease disputes.
The flights are continuing, but the network is being slashed while the fleet is being pared back.
Key timeline (financial & filings)
- November 2024: Files initial Chapter 11 in SDNY.
- February 20, 2025: The courts confirmed the plans, equitizing $795 million in debt, $350 million in new equity, along with $840 million in new secured debt; plus a $300 million revolver.
- March 12, 2025: Emerges from Chapter 11, and operations are given the green light.
- August 12, 2025: Issues going-concern warning as liquidity and pricing remain strained.
- August 29, 2025: Files second Chapter 11 in SDNY with its Q2 net loss at a whopping $246 million.
- Early September 2025: Starts cutting service to 11 U.S. cities beginning Oct. 2, and also wins approval to tap into $275 million in emergency funds.
Spirit’s double-dip Chapter 11 mirrors a broader pattern as it’s not the only airline to go under over the past five years.
- Go First (India): Creditors ₹65.2 billion ($781 million); later liquidation citing ₹110 billion ($1.3 billion) in liabilities.
- Bonza (Australia): Collapsed with a suffocating $168.2 million in debt after aircraft repossessions.
- flybe (UK): Second collapse; with a deficiency of £82.6 million($107 million).
- Aeromar (Mexico): Ceased operations with MXN 7B ($370 million) in debt.
- Viva Air (Colombia): Entered liquidation in 2023, reporting debts of 830 million.