Spirit Airlines warns it may not last another year with current cash flow problems

Spirit Airlines is facing a bleak year. 

Months after emerging from bankruptcy, the airline raised some major concerns on Monday about its ability to stay in business. In its second-quarter earnings, the company pointed to adverse market conditions, elevated domestic capacity, and continued weak demand for domestic leisure travel as major obstacles moving forward. The company reported a $245.8 million net loss on $1.02  billion operating revenue for the quarter that ended June 30.

Spirit filed for bankruptcy protection in November, making it the first major U.S. carrier to file for Chapter 11 since 2011. The company emerged from bankruptcy in March after a court approved restructuring backed by creditors. 

The airline, known for its yellow planes and heavily discounted fairs, told investors that it continues to experience challenges and uncertainties in its business operations and expects these trends to continue for at least the rest of 2025. 

To address these concerns, the company has made network and product enhancements, including its premium economy travel option. It attempted to reduce costs using sale-leasebacks of spare engines. Last month, the company announced it would furlough 270 pilots and demote 140 more this fall, Reuters reported. 

But even after these attempts, the company said its financial results will need to improve at a faster rate than anticipated to meet the minimum liquidity covenants of its debt obligations and credit card processing agreement. The company's credit card processor has asked for additional collateral to renew its agreement, which expires on December 31. Spirit is considering selling aircraft, real estate, and excess airport gate capacity to raise liquidity. 

If these measures are unsuccessful, Spirit’s management believes it’s likely the company won’t be able to meet its cash flow requirements and end up defaulting on its loans, which could halt operations within the next year. 

Spirit's stock fell by a whopping 40% in the first hour of trading Tuesday.