Airlines scramble to help stranded Spirit flyers after carrier collapses

Spirit Airlines ceased operations on Saturday following a doubling in jet fuel prices due to Iran war

Major airlines and the US government scrambled to help stranded passengers and employees after bankrupt discount carrier Spirit Airlines ceased operations on Saturday, the industry’s first casualty linked to the Iran war.

 

The overnight collapse of the carrier following a doubling in jet fuel prices will cost thousands of jobs. It is a blow to US President Donald Trump, who had proposed $500 million to save Spirit despite opposition.

 

Spirit’s demise highlights the unintended consequences of the Iran war, despite an uneasy ceasefire.

 

While Spirit was already struggling to turn a profit before the fuel shock, global carriers are contending with surging jet fuel prices as Iran continues to halt nearly all traffic through the Strait of Hormuz and the US Navy blockades Iranian ports.

 

 

Some of Spirit’s largest creditors, including Ken Griffin Citadel, a major hedge fund, opposed the government-backed rescue, arguing the terms would dilute the value of their claims by placing federal financing ahead of existing debt.

 

No US carrier of Spirit’s size — it accounted for 5 per cent of US flights last year — has liquidated in two decades. Spirit helped keep fares lower in markets where it competed against major carriers.

 

United Airlines , Delta Air Lines , JetBlue and Southwest are all capping ticket prices for Spirit customers who now need to rebook cancelled flights and customers must provide a Spirit flight confirmation number to qualify. Rival airlines are also offering free seats to help Spirit employees get home.

 

Spirit’s shutdown will benefit rivals such as JetBlue and Frontier Airlines, also reeling from the cost shock.

 

Spirit had 4,119 domestic flights scheduled between May 1 and May 15, offering 809,638 seats, according to data from aviation analytics firm Cirium.

 

Spirit had reached a deal with its lenders that would have helped it emerge from its second bankruptcy by late spring or early summer. But the spike in jet fuel prices derailed those plans, upending its cost projections and complicating its bankruptcy exit.

 

Spirit’s restructuring plan assumed jet fuel costs of about $2.24 a gallon in 2026 and $2.14 in 2027, but prices had climbed to around $4.51 a gallon by the end of April, leaving the carrier unable to survive without fresh financing. Jet fuel accounts for about a quarter of airlines’ operating expenses.

 

The airline flew around 1.7 million U.S. domestic passengers in February, with a 3.9 per cent market share, down from 5.1 per cent last year, Cirium data showed.

 

US does not think airline industry needs bailout, has access to cash

 

US Transportation Secretary Sean Duffy said he does not think the government needs to bail out low-cost airlines that have sought $2.5 billion in government relief because of high jet fuel prices, following the collapse of Spirit Airlines. “At this point, I don’t think it’s necessary. They do have access to cash. If they want to come to the government, we would be a lender of last resort. If they can find dollars in the private markets — I think that’s better for them,” Duffy said at a press conference at Newark airport.

 

He said the prospect of a Spirit bailout was seen by some other airlines as an opportunity to get money “not necessarily based on need.” A group of US budget airlines, including Frontier and Avelo, on Monday had proposed exchanging warrants that could be converted into equity stakes for $2.5 billion in US government assistance.  

Clipped wings

 

• United Airlines, Delta, JetBlue, Southwest capping ticket prices for Spirit customers; offering free seats to Spirit employees 
• Spirit Airlines accounted for 5% of US flights last year
• The budget carrier had filed for bankruptcy protection twice within a year and had not made a profit since 2019
• The airline flew 1.7 mn US passengers in Feb, with a 3.9% market share, down from 5.1% in 2025