Spirit Airlines faces the threat of liquidation due to soaring jet fuel prices, which have more than doubled following geopolitical tensions in the Middle East. The budget carrier, already in bankruptcy, had planned to emerge this summer after reaching a debt restructuring deal with creditors. However, the surge in fuel costs has put that plan at risk, according to reports.
Jet fuel prices have risen to around $4.24 per gallon, far exceeding Spirit's projected costs of $2.24 per gallon for this year and $2.14 for next year, as disclosed in March. The price spike follows the closure of the Strait of Hormuz, a key oil shipping route, after US and Israeli strikes on Iran. Oil prices surged, impacting airlines globally.
Bloomberg reported Wednesday that Spirit could be forced to liquidate as soon as this week, citing sources familiar with the matter. However, Reuters noted that while liquidation is possible, it is not the most likely scenario, and the airline is not expected to liquidate this week. Spirit declined to comment on what it called market rumours and speculation, stating that operations continue as normal.
If liquidation occurs, travellers could be left stranded, as airlines that cease operations often do so overnight. CBS News reported that other airlines have prepared rescue fares—discounted one-way tickets—to help affected passengers get home. Travel expert Katy Nastro advised Spirit customers not to cancel booked flights immediately, as doing so could forfeit rights to a refund if funds remain.
Spirit filed for bankruptcy in August last year, its second such filing in a year, and has lost over $2.5 billion since 2020. The airline's struggles have been well-documented, and the current fuel crisis adds further uncertainty to its future.
