Spirit Airlines canceled all flights and is going out of business

By Chris Isidore, CNN

(CNN) — Spirit Airlines, the pioneering discount airline that shook up the budget travel business, is shutting down its operations.

The company is in its second bankruptcy and was in serious financial trouble well before the Iran war sent jet fuel prices surging. America’s eighth-largest carrier tried to reach a deal with the Trump administration on an 11th-hour rescue package, but a key group of creditors balked at the proposal.

Spirit is the first major US airline in 25 years to go out of business because of financial problems. Its demise has stranded millions of passengers: Spirit canceled all flights, shut down its customer service and instructed customers not to go to the airport. Customers with Spirit tickets will be issued refunds, and they have been instructed to rebook travel on other carriers.

“We are proud of the impact of our ultra-low-cost model on the industry over the last 34 years and had hoped to serve our guests for many years to come,” Spirit said in a statement. “It is with great disappointment that on May 2, 2026, Spirit Airlines started an orderly wind-down of our operations, effective immediately.”

The decision will put 17,000 workers out of a job, including 14,000 Spirit employees and thousands of contractors and other people whose jobs depend on Spirit. Eliminating the airline’s flights will also probably result in higher fares across the entire US airline industry.

Stranded passengers

Passengers holding Spirit tickets will have to scramble to make other travel arrangements.

In a note to its customers, Spirit said it is not able to help rebook flights to another airline, but it will automatically issue refunds to passengers who bought tickets through Spirit with a credit or debit card. Passengers who booked flights via a travel agent “should contact the travel agent directly to request a refund,” Spirit said.

Customers who booked flights using any other method, including a voucher, credit or Free Spirit points, may be out of luck. Companies that go out of business typically stop honoring rewards, coupons and vouchers after they cease operations. Spirit said potential refunds of those payment methods will be determined in the company’s bankruptcy court process.

Passengers in the middle of a trip must now find a seat on another airline. That could be a costly problem: Last-minute “walk-up” fares are the most expensive in the industry, and Spirit said it wouldn’t reimburse customers for incidental travel costs associated with cancelled trips – but insurers might cover the cost for customers who purchased travel insurance.

Several US carriers announced they would support affected Spirit passengers, including fare caps for nonstop routes that Spirit had flown.

Out of money; out of time

Spirit has been unprofitable since the pandemic, warning repeatedly in recent years there was “substantial doubt” over its ability to continue flying. Spirit filed for bankruptcy twice, most recently in August 2025.

The company announced it had reached a deal with its creditors in February to emerge from its latest bankruptcy with less debt and the ability to keep flying. But three days later, the war in Iran started, choking off about 20% of the world’s oil supply and sending jet fuel prices soaring.

High jet fuel costs have pinched all US airlines, sending their costs surging. Jet fuel is the second greatest cost for airlines, behind only labor. American Airlines said that every penny that jet fuel prices rise costs the airline $50 million over the course of a year. United said last month if jet fuel prices continue at their current level, the airline could incur $11 billion in additional expenses – double its biggest-ever annual profit.

Larger airlines have cushioned the blow somewhat by hiking some fees and fares and cutting flights. But smaller airlines, including Spirit, ran into trouble: Discount carriers like Spirit have a harder time raising fares because they rely on ultra-low fares to attract business.

The Association of Value Airlines, the trade group for smaller airlines like Spirit as well as Frontier, Allegiant and Breeze, has been talking to members of Congress about a $2.5 billion government assistance package – above and beyond the $500 million bailout that Spirit had discussed with the Trump administration.

Rejected bailout

An attorney for Spirit told a bankruptcy court last week that the airline was in “very advanced discussions” with the Trump administration on a rescue package.

But a key group of creditors rejected that plan, according to a source familiar with negotiations. It would have given the government control of the overwhelming majority Spirit’s shares.

President Donald Trump on Friday acknowledged that a deal may not be possible.

“Well, we’re looking at it — but if we can’t make a good deal, no institution’s been able to do it,” Trump said on Friday. “I’d like to save the jobs, but we’ll have an announcement sometime today. We gave them a final proposal.”

Although Trump last week signaled his approval, the idea of a bailout for a single airline sparked backlash from both the airline industry and among Republican members of Congress.

Winding down operations

About an hour before the official announcement, Spirit’s employees were getting word of the loss of their jobs. The leadership of the Association of Flight Attendants at Spirit sent a message out to the union’s 5,000 members at the airline about 1 a.m., stating: “We are delivering the hardest news of our lives that Spirit will permanently cease operations at 3:00 AM Eastern Time on May 2.”

Spirit ranked as the eighth-largest US airline in 2025 by the number of seats offered. The airline was a pioneer in offering ultra-low base fares in the US, charging extra for things like carry-on bags. That model pushed fares lower, even for passengers on other carriers and prompted larger airlines to offer cheap “basic economy” tickets.

Spirit had about 9,000 flights scheduled from May 2 through the end of the month, according to aviation analytics firm Cirium. Those flights have a total of 1.8 million seats. So that’s an average of about 300 flights and 60,000 potential passengers a day affected in just the next month.

Removing the 2% of domestic US flights Spirit was scheduled to fly this summer will push fares higher across the entire industry.

Bankruptcies are common in the airline industry, which is a capital-intensive business. Companies deal with massive costs for aircraft and labor, as well as the wild swings in the price of fuel and demand for travel. Even in the best of times, airlines can run on thin margins. Eight major US airlines have filed for bankruptcy over the past 25 years.

In many cases, bankrupt airlines are purchased by solvent rivals, which has led to widespread consolidation. Four major carriers – United, American, Delta and Southwest – now control about 80% of flights available to passengers.

But an airline completely shutting down is far less common. Spirit’s closure is the first shutdown of a significant US airline since Midway Airlines went out of business immediately following the September 11, 2001 attacks.

This story has been updated with additional context and developments.

CNN’s Donald Judd, Ramishah Maruf and Ruben Correa contributed to this report.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.