Spirit Airlines at risk of facing liquidation as fuel costs bite

[WASHINGTON] Spirit Aviation is at risk of being liquidated as rising jet fuel prices spurred by the US war with Iran further squeeze the bankrupt budget carrier’s finances, according to sources familiar with the matter.

Any decision by the company to potentially liquidate could come as soon as this week, said the sources, who asked not to be named because the discussions are private. The situation is fluid as Spirit engages in ongoing talks with its creditors, and its plans could still change, they added.

A Spirit spokesperson declined to comment. Representatives of creditor groups did not return calls seeking comment.

The airline, which is still operating, was expected to exit bankruptcy by this summer after reaching an agreement with creditors on a plan to trim billions of US dollars in debt and reduce the cost of its fleet. The carrier filed for Chapter 11 bankruptcy protection in August 2025 – the second time it had to do so in under a year.

Spirit’s past attempts to merge with other carriers have not panned out. Before filing its first bankruptcy, the carrier agreed to be acquired by JetBlue Airways, but a federal judge blocked the tie-up in 2024 on antitrust grounds. Then, Frontier Group and Spirit revived talks to merge in 2025, Bloomberg previously reported.

Airlines broadly are grappling with higher jet fuel prices due to the US-Iran war and the effective closure of the Strait of Hormuz, a key passageway for oil. The conflict has brought the possibility of major shakeups in the aviation industry to the fore.

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United Airlines Holdings CEO Scott Kirby has even pitched a possible tie-up with American Airlines Group to US President Donald Trump, though the considerations predate the start of the war. BLOOMBERG