The roller coaster ride that has defined Spirit over the last five years appears to be coming to an end. After pioneering the ultra low cost carrier (ULCC) model in the US, the airline rose quickly and then fell hard. It was never able to turn a profit after the pandemic, and it filed for bankruptcy protection. It exited bankruptcy in March, and now that the airline is a public company again, it has very quietly posted its Q2 results. If you didn’t think it would be possible to go bankrupt, come out, and somehow post even worse results… well, you were wrong.
By the numbers, there wasn’t much to say that’s positive, though we can try. The airline’s total unit revenue (TRASM) rose 4.8 percent vs Q2 2024, and its revenue per passenger flight segment was up 7 percent from $108.46 to $116.05. That’s as close as we can get to having good news here.
Now, the bad news. Spirit’s capacity plunged 23.9 percent year-over-year on 22 percent fewer departures. If you’re going to shrink that much, you really need to boost revenue to keep up with cost creep. Here’s where things start to get wild.
Remember that the unit revenue rose 4.8 percent, right? Unit costs were up about double that. And it was only that good because there was a big fuel-price benefit. Unit costs excluding fuel and special items was up an eye-popping 19.2 percent.
The cost problem is very real when you shrink, and Spirit’s commercial plan makes that even worse. Spirit ended Q2 with 215 aircraft which is up from the 210 a year ago. There are always Pratt & Whitney issues to consider that may have grounded different numbers of aircraft in each quarter, but that hardly explains this. What really happened is Spirit just stopped flying airplanes at off-peak times. Its aircraft utilization tanked 26.4 percent to a miserable 7.8 hours per day. That’s good for revenue, but if revenue doesn’t climb more than costs do, you’re out of luck. And those costs… yikes.
Spirit says “The [cost] increase on a per-ASM basis was primarily due to increases in salaries, wages and benefits expense, other operating expense, aircraft rent expense, landing fees and other rents expense, and distribution expense.” It seems like it might have been easier to just list the things that were not up.
When we bring this all together, the airline posted a -18.1 percent operating margin which is significantly worse than last year’s -11.9 percent. Net margin was -24.1 percent. Cash and cash equivalents were down to just over $407 million after burning through almost $250 million in Q2 alone. All of this adds up to the airline being in very serious trouble.
It’s bad enough that Spirit has issued a so-called “going concern” warning in its 10-Q, which is what public companies put out if they think they might not make it through the next 12 months.
Spirit says overcapacity and weak leisure demand in the domestic market have caused big problems. It has been trying to counteract this in several ways, “including the implementation of network and product enhancements, including its Premium Economy travel option, consummation of sale-leaseback transactions related to certain of its owned spare engines, and other discretionary cost reduction strategies, including the pilot furloughs announced in July 2025.”
But then, Spirit says that’s not enough. It has done the math, and it is going to bust through the debt covenants and the requirements of the credit card processor agreement if it doesn’t do more. So it’s basically looking to do a fire sale. Airplanes, real estate, excess gates, cutting fixed costs, and trying to raise more money are all on the table. But if it can’t? Well, then it’s over.
Notably, the credit card processor deal ends at the end of this year, and to renew, the company wants a bigger holdback. In other words, the card company will hold more of Spirit’s money until after travel is complete so that it doesn’t get left holding the bag if Spirit fails. And that is often the death knell for a struggling airline. In conclusion, the airline coldly notes:
Because of the uncertainty of successfully completing the initiatives to comply with the minimum liquidity covenants and of the outcome of discussions with Company stakeholders, management has concluded there is substantial doubt as to the Company’s ability to continue as a going concern within 12 months from the date these financial statements are issued.
Considering these results and the credit card processor deal expiring at year-end, I’d be amazed if the airline made it into 2026. In fact, I don’t see how it can even get that far with the cash burn that it has right now.
It’s hard not to feel for the people at the airline who have gone through so much in the last few years. But that’s the airline business. And there will be opportunity for many to go elsewhere. If Spirit fails, this will at least strengthen the position of other airlines like Frontier, Breeze, JetBlue, and maybe even United and Sun Country. But that’s all speculation. Right now, all we know is that Spirit is in critical condition.
