If Spirit ends up shutting down, these airlines stand to benefit

By Claudia Assis

A shuttered airline would open up precious airport slots, gates and routes, and could create opportunities for other carriers to expand

The airline industry has faced a difficult business environment as rising jet-fuel prices put pressure on balance sheets, but Spirit was already struggling to remain afloat.

Spirit Airlines appears to be losing its fight to stay in business, and its industry rivals may be able to capitalize on its woes.

The Wall Street Journal reported that the ultralow-cost carrier is preparing to cease operations after a bailout deal from the U.S. government fell through.

President Donald Trump said Friday that his administration was still looking at making arrangements for Spirit. "If we can do it, we'll do it, but only if it's a good deal," he told reporters outside the White House as he was preparing to travel to Florida.

A Spirit spokesperson declined to comment on ongoing discussions and said Spirit "is operating as usual."

The Journal reported Friday that Spirit didn't get enough support from certain bondholders and the government to secure a $500 million rescue deal and that the airline was preparing to shut down.

That would open up precious airport slots, gates and routes, and could create opportunities for other carriers to expand.

Those that stand to benefit would be carriers focused on domestic and East Coast routes, such as JetBlue (JBLU) and American Airlines (AAL).

Spirit last year served 89 destinations in the the U.S. and countries throughout Latin America and the Caribbean, it said in a recent filing. As of December, it had a fleet of 131 Airbus single-aisle aircraft.

If the deal with the government falls through, "it is hard to see how Spirit continues as a going concern," said Stephen Trent, president of SDT Capital Advisors. "Folks that have purchased tickets should perhaps consider how else they will meet their travel needs or whether they get any money back."

Spirit's routes and airport slots, while attractive to some other airlines, are admittedly unlikely to be game changers for any company.

"They are not a big player," said Rob Britton, a professor at Georgetown University and a former executive at American Airlines. "This is not a dramatic shakeup of the airline industry."

Any benefit for other carriers would be incremental, he said.

That's because Spirit was flying to places that major U.S. airlines were already serving.

That has been one of Wall Street's main criticisms of Spirit - that it went head to head with the majors rather than taking a budget airline's well-worn path of doing business in underserved areas and smaller airports.

"Most observers would say that Spirit made a strategic blunder" in going that way, Britton said.

The airline industry has faced a difficult business environment as rising jet-fuel prices put pressure on carriers' balance sheets, but Spirit was already struggling to remain afloat. In August, it filed for bankruptcy for the second time in less than a year.

The airline confirmed it was in talks with the government last week and said the terms of the financing package had been shared with creditors.

There's likely strong opposition in Washington to the deal, said Henry Harteveldt, an analyst and president of Atmosphere Research Group.

Airlines are financially risky, and Congress probably recognized that investing in Spirit would be "putting good money after bad," he said.

With sympathy for Spirit workers, "this is a business that is unsalvageable at this point," Harteveldt said, with no viable plan to remain in business.

Its core customer has been hit with rising costs; it flies older, fuel-guzzling airplanes; and it faces direct competition from larger U.S. airlines, he said.

"It just leaves Spirit with very little room to maneuver," Harteveldt said. "They had bad luck with [the war in Iran], but even if the war hadn't started, it is unclear if Spirit would have had a viable business."

-Claudia Assis

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05-01-26 1359ET