Spirit Airlines Shuts Down as Second Chapter 11 Reorganization Collapses

Spirit Airlines went out of business after 34 years, ceasing all flight operations at roughly 3:00 a.m. ET on May 2, 2026 and pivoting from a planned reorganization to a court-supervised wind-down. The shutdown ended two chapter 11 cases filed less than a year apart in the U.S. Bankruptcy Court for the Southern District of New York: the first under lead case number 24-11988, filed November 18, 2024, and the second under lead case number 25-11897, filed August 29, 2025. The first case was a prepackaged restructuring before Judge Sean H. Lane that converted approximately $795 million of debt to equity and closed in 114 days; the second came five months after emergence, after AerCap terminated aircraft leases and credit card processor Elavon drained liquidity. Spirit filed a Restructuring Support Agreement and Plan of Reorganization on March 13, 2026 targeting emergence by early summer with debt and lease obligations cut from $7.4 billion to roughly $2 billion, but a fuel-price spike and a failed government rescue left no go-forward financing. The wind-down has since produced a WARN Act class action over the mass layoff, a new $275 million aircraft-financing facility, and a multi-track auction of slots, gates, and the Free Spirit loyalty program.

Debtor(s)	Spirit Aviation Holdings, Inc. (+ affiliates, including Spirit Airlines, LLC)
Case Number	24-11988 (first case); 25-11897 (second case)
Court	U.S. Bankruptcy Court, Southern District of New York
Judge	Hon. Sean H. Lane
Petition Date	November 18, 2024 (first case); August 29, 2025 (second case)
First Case Confirmation	February 20, 2025
First Case Effective Date	March 12, 2025
Total Debt (Second Filing)	~$2.8 billion funded debt; ~$5 billion lease obligations
DIP Facility (Second Case)	$1.225 billion ($475 million new money + $750 million roll-up); Barclays Bank PLC as fronting lender
Claims Agent	Epiq Corporate Restructuring, LLC
Current Status	Orderly wind-down announced May 2, 2026; all flights cancelled

Open the public case profile for docket context, hearings, advisors, and plan updates.

Causes of Distress and Failed Mergers

ULCC competitive pressures. Spirit developed the ultra-low-cost carrier model in the U.S., offering low base fares while charging separately for services such as carry-on bags and seat selection. The model depended on maintaining a fare differential with legacy carriers, but that differential narrowed as Delta, United, and American introduced basic economy products competing directly on price. Southwest Airlines also slashed domestic pricing in response to its own operational challenges, further depressing Spirit's core leisure travel segment. Fuel and labor costs increased faster than ticket prices, compressing margins. Spirit negotiated new contracts with flight attendant and pilot unions that increased labor costs as revenue pressures mounted.

Frontier Airlines bid (2022). In February 2022, Frontier Airlines agreed to acquire Spirit for $2.9 billion in a transaction that would have created the fifth-largest U.S. carrier. JetBlue Airways intervened with a competing offer, and Frontier withdrew after repeatedly increasing its offer failed to secure shareholder support.

JetBlue Airways acquisition attempt (2022--2024). Spirit's board accepted JetBlue's $3.8 billion offer, triggering regulatory review. In March 2023, the Department of Justice filed suit to block the merger on antitrust grounds. A federal judge blocked the acquisition in January 2024, and the merger agreement was terminated in March 2024.

Financial deterioration and engine groundings. Spirit accumulated approximately $2.5 billion in losses from 2020 through 2024, with losses reported in every quarter following the COVID-19 pandemic, and the deterioration deepened as the second case progressed, with Spirit reporting a $2.76 billion net loss for 2025. Spirit also faced operational disruptions from Pratt & Whitney GTF engine inspections that required grounding aircraft. The issue affected approximately 25 A320neos in 2024. As of the second filing in August 2025, 38 GTF-powered aircraft were grounded, with nearly all 79 GTF engines expected to require inspection and repair within two years.

First chapter 11 Case (November 2024 -- March 2025)

Spirit's first bankruptcy was structured as a prepackaged case, supported by holders of over 75% of senior secured notes before filing. The confirmed plan converted approximately $795 million in senior secured notes to equity. Bondholders became majority equity owners of the reorganized company, with a new board of directors appointed representing bondholder interests. Existing shareholders were wiped out and Spirit's stock was delisted from the NYSE. Spirit committed to $350 million in new equity financing and emerged on March 12, 2025, 114 days after filing.

Davis Polk & Wardwell LLP served as debtors' counsel, with Alvarez & Marsal as restructuring advisor and Epiq Corporate Restructuring, LLC as claims and noticing agent. Willkie Farr & Gallagher LLP served as committee counsel.

Post-Emergence Collapse and Second Filing

CEO departure and operational contraction. In April 2025, approximately one month after emergence, CEO Ted Christie resigned. Spirit reduced service to multiple airports and cancelled all routes to 12 cities, concentrating operations on higher-yield routes from Florida bases. Spirit also cancelled outstanding Airbus aircraft orders for 52 A320neo family aircraft and 10 options. In August 2025, Spirit disclosed going-concern doubts months after emergence.

Elavon credit card processor liquidity drain. Spirit's primary credit card processor, Elavon (an affiliate of U.S. Bank National Association), required Spirit to provide substantial additional collateral. On August 15, 2025, Spirit transferred $50 million in cash to a pledged account. On August 20, Elavon imposed a holdback of up to $3 million per day until its exposure was fully collateralized. These provisions drained Spirit's operating liquidity in the weeks before filing, according to the Cromer declaration.

AerCap lease terminations. On August 25, 2025 -- four days before the second petition -- AerCap sent lease termination notices covering 36 undelivered aircraft (2027--2028 deliveries) and a default notice on 37 aircraft in Spirit's existing fleet. Spirit filed out of concern that disclosing the notices would prompt other counterparties to take adverse action, according to the Cromer declaration. Spirit drew the full $275 million under its revolving credit facility on August 21, 2025, providing near-term liquidity for the chapter 11 process.

Second filing. Spirit filed for chapter 11 a second time on August 29, 2025, five months after emerging from the first case.

Capital Structure and DIP Financing

Prepetition debt. As of the August 29, 2025 petition date, Spirit's total funded debt was approximately $2.8 billion: a $275 million revolving credit facility (fully drawn), $856.1 million in 12.00% senior secured notes issued upon first-case emergence, $1.525 billion in aircraft debt, and $136.3 million in unsecured CARES Act term loans from the U.S. Treasury (maturing 2031). In addition, the Cromer declaration reported approximately $5 billion in capitalized lease obligations on 166 leased aircraft, at an average monthly rent of approximately $326,000 per aircraft.

DIP financing. The DIP facility totaled $1.225 billion: $475 million in new money term loans and up to $750 million in roll-up of prepetition secured notes obligations. Barclays Bank PLC served as fronting lender. The court entered the interim DIP order on October 10, 2025, and the final DIP order on October 31, 2025. The DIP included superpriority administrative expense claims and replacement liens for the secured notes parties and revolving facility parties.

DIP amendment (December 29, 2025). The DIP was amended to provide an additional $100 million in incremental financing. The amendment conditioned later draws on either a lender-acceptable strategic transaction or the filing of an acceptable plan of reorganization, maintaining the dual-track posture between sale and plan outcomes.

Key Settlements and Asset Sales

AerCap global restructuring (approved October 10, 2025). The court approved a restructuring term sheet with AerCap resolving Spirit's largest lessor dispute. Certain leases were assumed, others rejected, and undelivered aircraft leases were deemed rejected nunc pro tunc to the petition date. AerCap received an allowed general unsecured claim of $572.4 million against Spirit Airlines, LLC. Both parties exchanged mutual releases.

IAE/Pratt & Whitney engine agreement (approved December 23, 2025). The court approved a restructuring term sheet with International Aero Engines providing Spirit up to $140 million in engine credits and access to up to 100 Green Time engines via short-term leases, partially addressing the GTF grounding crisis.

Chicago O'Hare gate sales. Spirit sold preferential-use gate leaseholds at O'Hare Airport through two transactions: Gates G8 and G10 to American Airlines for $30 million (approved December 15, 2025) and Gates G12 and G14 to United Airlines for $30.2 million (approved February 25, 2026). Both transactions required Spirit to use proceeds to prepay DIP loans.

Fleet reduction and aircraft sales. Spirit engaged in extensive negotiations with aircraft lessors under Section 1110 of the Bankruptcy Code. The October 7, 2025 omnibus Section 1110 order was the most-cited document in the case. Multiple extension stipulations were entered with lessors including Stratos, JSAI, AerSale, Merx Aviation, and others. Spirit sought court approval to return 87 Airbus jets to lessors, and the fleet was expected to be reduced from 214 aircraft to approximately 100 through lease rejections and negotiated terminations. On February 11, 2026, Spirit filed a bidding procedures motion for the sale of 20 Airbus A320 and A321 aircraft, with CSDS Asset Management LLC as stalking horse bidder at $16 million (3% break-up fee, up to $2.5 million expense reimbursement). The auction was scheduled for April 20, 2026, with a sale hearing on or about April 23, 2026. Separately, the court approved a $533 million stalking horse bid for 20 Airbus aircraft in a related April jet auction proceeding.

Contested Matters, Labor, and Professional Fees

Examiner investigation. The court appointed Marc J. Heimowitz as examiner on October 28, 2025, to investigate the circumstances surrounding Spirit's refiling approximately five months after first-case confirmation. The Examiner's Report, filed December 15, 2025, concluded that there was no evidence of intentional two-stage bankruptcy planning, no reliance on an assumed post-confirmation merger, and that Spirit 1 projections were reasonably supported by information available at confirmation. The report identified the $350 million equity injection as compelling evidence that sophisticated parties believed in the first plan's viability. The proximate causes of Spirit 2 were the Elavon credit card collateral dispute and AerCap's lease termination notices, both in August 2025.

CBA rejection, labor, and claims administration. The court authorized rejection of Spirit's collective bargaining agreement on December 29, 2025. Spirit announced plans to furlough approximately 1,800 flight attendants as part of second-case cost reductions. In November 2025, Spirit reached agreements with its pilots and flight attendants as part of the restructuring. A bar date motion was filed on November 17, 2025, and the court entered a claims objection procedures order on February 25, 2026, authorizing the debtors to file omnibus objections and settle many claims without separate court approval. A Consortium of Airports filed a Rule 2019 statement on February 17, 2026, indicating organized airport creditor coordination in connection with the sale process. An adversary proceeding (Case No. 26-01003) was filed on January 12, 2026, against Terrance Mleczko and TM Defense Solutions LLC.

Key professionals. Davis Polk & Wardwell LLP serves as lead debtors' counsel, PJT Partners LP as investment banker, FTI Consulting, Inc. as restructuring advisor, Debevoise & Plimpton LLP as fleet counsel, O'Melveny & Myers LLP as special labor counsel, Ernst & Young LLP as audit and tax advisor, and Epiq Corporate Restructuring, LLC as claims and noticing agent. Willkie Farr & Gallagher LLP serves as counsel to the official committee of unsecured creditors, with AlixPartners, LLP as committee financial advisor, Jefferies LLC as committee investment banker, and Alton Aviation Consultancy LLC as specialized aviation advisor. Glenn Agre Bergman & Fuentes LLP served as examiner counsel, M3 Advisory Partners, LP as examiner financial advisor, and Bielli & Klauder, LLC as fee examiner counsel.

First interim fees (August 29 -- November 30, 2025). Approved by omnibus order on January 26, 2026, the first interim period fees totaled $32.9 million, led by FTI Consulting ($13.0 million), Davis Polk ($12.9 million), and Debevoise & Plimpton ($5.1 million). Subsequent fee awards in late February and early March 2026 covered the examiner team ($1.2 million combined), committee professionals (Willkie Farr at $2.1 million, Alton Aviation at $2.8 million, PJT Partners at $2.7 million, Ernst & Young at $1.8 million), and others.

RSA and the Collapse of the Reorganization

On February 24, 2026, Spirit announced an agreement in principle on key terms of a restructuring support agreement with its DIP lenders and secured noteholders. On March 13, 2026, Spirit filed a Disclosure Statement and a Joint Chapter 11 Plan of Reorganization supported by that RSA. The plan contemplated a go-forward airline with total debt and lease obligations reduced from $7.4 billion pre-filing to approximately $2 billion post-emergence, a fleet rightsized to 76--80 aircraft by the third quarter of 2026 (primarily Airbus A320/A321ceo, with growth aircraft planned between 2027 and 2030), and a network focused on Fort Lauderdale, Orlando, Detroit, and the New York area. The plan exhibits filed on April 6, 2026 already included liquidation and wind-down analysis alongside a chapter 7 comparison. The plan was never confirmed.

Two developments eliminated the liquidity needed to emerge. A geopolitical jet-fuel spike added nearly $100 million in incremental fuel costs between March 1 and April 30, 2026, exceeding Spirit's available liquidity, according to the Cromer wind-down declaration. At the same time, Spirit had been in advanced talks with the United States Government over a rescue financing package; late in the week before the shutdown, the Debtors were told the financing was no longer available, leaving the final-draw conditions under the DIP credit agreement unsatisfied. The decision to wind down was made the evening of Friday, May 1, 2026.

Spirit ceased all passenger flight operations at approximately 3:00 a.m. ET on Saturday, May 2, 2026, requested an FAA ground stop, and announced an immediate orderly wind-down, telling customers not to go to the airport and saying card refunds would be processed automatically. CEO Dave Davis said the March restructuring deal would have allowed Spirit to emerge as a go-forward business, but that the fuel shock left it without the additional liquidity needed to continue. The shutdown terminated approximately 17,000 employees, and former workers filed a putative WARN Act class action (Adversary No. 26-01043) on May 12, 2026, alleging Spirit failed to give the 60 days' advance notice required before the mass layoff and seeking 60 days' pay plus benefit coverage and related damages for the class.

Wind-Down, Asset Liquidation, and the WARN Act Class Action

On May 4, 2026, the Debtors filed an omnibus motion to wind down operations and amend the DIP, and the court entered the Wind-Down and DIP Amendment Order on an expedited basis on May 8, 2026. The order authorized the Debtors to implement the wind-down using their business judgment, approved DIP amendments and consensual cash collateral use under an initial wind-down budget (with $5.0 million of May funding released on May 4), authorized modification or termination of employee programs, and approved modified contract-rejection and non-fleet asset disposition procedures. The Debtors terminated the bulk of the workforce on May 2 and retained roughly 150 employees to run the wind-down, a figure expected to fall to about 40 after three months. The court also entered an owned-equipment sale and abandonment order on May 6, 2026.

Wind-down retention and incentive plans. The May 8 order approved a Key Employee Retention Plan for non-insider staff, expected to cost approximately $10.7 million and funded through a segregated escrow, with participation conditioned on a release of claims. A separate Key Employee Incentive Plan for three corporate officers, with awards tied to 1.75% of liquidation proceeds plus a share of wind-down cost savings, was carved out of the order and set for a June 10, 2026 hearing. The U.S. Trustee objected that the incentive payments resembled retention bonuses for insiders outside the protections of a confirmed plan and that the proposed release scope was overbroad, joined by ALPA and certain creditors. After the June 10 hearing, the court directed the Debtors to file the KEIP metrics under seal and scheduled a separate bench ruling for June 12, 2026.

HFS DIP financing. Separate from the original DIP, the court entered an HFS DIP financing order on May 29, 2026 providing Spirit Airlines, LLC up to $275 million to refinance existing "HFS Aircraft" debt, eliminate cross-default issues, and maximize aircraft sale proceeds. Barclays Bank PLC again served as fronting lender, with commitment parties advised by Perella Weinberg Partners. The facility priced at Term SOFR plus 10.25% (or base rate plus 9.25%) with a 2.00% default rate and an 8.00% put option premium. Certain lessors and lenders filed a joint objection to the motion.

Asset liquidation. The Debtors launched a sale process for substantially all remaining valuable assets through a bidding procedures motion filed May 27, 2026, covering New York LaGuardia takeoff and landing slots, campus properties (hangars, a corporate office complex, a training center, and a residential building), ground service equipment, spare engines, flight simulators, and the Free Spirit loyalty program and related intellectual property. The Debtors sought authority to designate stalking horse bidders at a $25 million minimum and proposed two auctions: July 9, 2026 for the bid assets other than the campus, and July 22, 2026 for the campus properties. The Port Authority of New York and New Jersey objected to the LaGuardia slot sale procedures, prompting a revised bidding procedures order on June 9, 2026.

Administrative-claim pressure. The Debtors filed a pre-wind-down administrative bar date motion on May 19, 2026 and circulated an administrative expense claims schedule. Vendors and counterparties including GSE America, Birlasoft, Trego-Dugan, and Broward County filed administrative-expense and stay-relief motions in May and June.

Key Timeline

Date	Event
February 2022	Frontier agrees to acquire Spirit for $2.9 billion
2022	JetBlue launches competing $3.8 billion offer
March 2023	DOJ files suit to block JetBlue-Spirit merger
January 2024	Federal judge blocks JetBlue acquisition
March 2024	JetBlue-Spirit merger agreement terminated
November 18, 2024	First chapter 11 petition filed
February 20, 2025	First case confirmation order entered
March 12, 2025	First case emergence (effective date)
April 2025	CEO Ted Christie resigns
August 12, 2025	Spirit discloses going-concern doubts
August 15, 2025	Spirit pays $50 million to Elavon as collateral
August 21, 2025	Spirit draws full $275 million revolving credit facility
August 25, 2025	AerCap sends lease termination notices (73 aircraft)
August 29, 2025	Second chapter 11 petition filed
October 7, 2025	Omnibus Section 1110 order entered
October 10, 2025	DIP interim order; AerCap restructuring term sheet approved
October 28, 2025	Examiner Marc J. Heimowitz appointed
October 31, 2025	DIP final order entered ($1.225 billion)
November 7, 2025	Spirit reaches agreements with pilots and flight attendants
November 17, 2025	Bar date motion filed
November 18, 2025	Schedules and SOFAs filed
December 15, 2025	Examiner's Report filed; American Airlines gate sale approved ($30 million)
December 23, 2025	IAE/Pratt & Whitney engine agreement approved ($140 million in credits)
December 29, 2025	CBA rejection authorized; DIP amended (+$100 million)
February 11, 2026	Aircraft sale bidding procedures motion filed (CSDS stalking horse, $16 million)
February 17, 2026	Consortium of Airports files Rule 2019 statement
February 24, 2026	Agreement in principle on RSA terms announced
February 25, 2026	United Airlines gate sale approved ($30.2 million); claims procedures order entered
March 13, 2026	RSA and Plan of Reorganization filed
April 6, 2026	Plan exhibits filed, including liquidation/wind-down analysis
May 1, 2026	Decision to wind down made; U.S. government rescue financing reported unavailable
May 2, 2026	All flight operations cease ~3:00 a.m. ET (FAA ground stop); wind-down announced; ~17,000 employees terminated
May 4, 2026	Wind-down motion filed; $5.0 million May funding released
May 6, 2026	Owned-equipment sale and abandonment order entered
May 8, 2026	Wind-Down and DIP Amendment Order entered; KERP approved ($10.7 million); KEIP deferred
May 12, 2026	WARN Act class action filed (Adv. No. 26-01043)
May 19, 2026	Pre-wind-down administrative bar date motion filed
May 27, 2026	Asset sale procedures motion filed (LGA slots, campus, Free Spirit program)
May 29, 2026	HFS DIP financing order entered (up to $275 million)
June 10--12, 2026	Wind-down KEIP heard; metrics filed under seal; bench ruling set for June 12
July 9 and 22, 2026	Wind-down asset auctions (scheduled)

Frequently Asked Questions

When did Spirit Airlines file for bankruptcy?

Spirit Airlines filed for chapter 11 twice: first on November 18, 2024, and again on August 29, 2025. The second filing came approximately five months after emergence from the first case.

Why did Spirit file for bankruptcy a second time?

The immediate triggers were Elavon's credit card collateral requirements, which drained $50 million in cash plus $3 million per day in holdbacks, and AerCap's termination notices covering 73 aircraft on August 25, 2025. An independent examiner found no evidence that the second filing was planned during the first case.

Did Spirit Airlines convert to chapter 7?

Spirit did not convert to chapter 7. The Wind-Down and DIP Amendment Order entered May 8, 2026 authorized an orderly wind-down and asset liquidation within the second chapter 11 case, and Spirit's plan exhibits had already paired that wind-down with a chapter 7 liquidation comparison. A separate U.S. airline, Silver Airways, did convert to chapter 7 after a zero-bid sale.

What is the DIP facility in the second case?

The DIP facility totals $1.225 billion: $475 million in new money term loans and up to $750 million in roll-up of prepetition secured notes. Barclays Bank PLC serves as fronting lender. The facility was amended in December 2025 to add $100 million in incremental financing.

What happened to Spirit's plan of reorganization?

Spirit filed a plan on March 13, 2026 that targeted emergence by early summer 2026 and would have reduced total debt and lease obligations from $7.4 billion to approximately $2 billion. The plan did not produce a go-forward airline. On May 2, 2026, Spirit announced an orderly wind-down, cancelled all flights, and said it lacked the additional liquidity needed to continue operating.

Who is the claims agent for Spirit Airlines?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent in both Spirit chapter 11 cases. The wind-down phase added a pre-wind-down administrative bar date, and a claims objection procedures order entered February 25, 2026 governs how the Debtors object to and settle claims.

For related coverage, see ElevenFlo's analysis of Silver Airways' zero-bid sale and chapter 7 conversion, Azul's confirmed airline restructuring, and the Incora uptier litigation in the aviation supply chain.