Last week it was reported that Spirit Airlines was facing a cash shortage which could lead to a cessation of operations. There is now a positive update on that front as the airline has received additional funding.
Spirit Amends Credit Agreement with Noteholders
When it was first reported that Spirit was facing a cash crunch it was due to the fact that the airline had a December 13, 2025 bankruptcy funding deadline related to its debtor-in-possession (DIP) credit agreement. At the time, it was unclear if the airline would be able to meet the deadline, sparking speculation of its impending collapse.
There’s good news on the funding front as the airline announced today it reached an agreement with its senior secured noteholders which will allow the third funding round of an incremental $100 million to be fulfilled today. The airline will have $50 million available immediately while the remaining funds will subject to previously agreed conditions that relate to further progress on a standalone plan of reorganization or a strategic transaction.
This is great news for passengers and Spirit employees as the airline enters a busy holiday travel period (My own in-laws are flying Spirit back from Mexico over the New Years Holiday). In announcing the agreement, Dave Davis, Spirit’s President and Chief Executive Officer, said this:
“We are grateful to our lenders for continuing to support Spirit’s transformation, recognizing all the significant progress our team has made in recent months. We continue to provide high-value travel options, which benefit American consumers whether they fly with us or not, and look forward to welcoming our Guests aboard throughout this holiday season and into the future.”
Major Changes are Coming
While the full extent isn’t known, major changes are coming to the carrier. According to the press release Spirit is currently in active negotiations on both a standalone reorganization plan and a strategic transaction. I find this interesting as the airline has rejected numerous merger proposals from Frontier Airlines in the past but, they may have found a suitable partner.
It’s worth noting that Spirit’s current financial situation can be traced back to its failed merger with JetBlue, the proposal was blocked by the U.S. Department of Justice in early 2024 due to antitrust concerns and was formally terminated in March 2024.
Though the airline may be struggling financially, there is plenty of value to the company. Its aircraft, gates, and other infrastructure will no doubt be appealing to other airlines; American just paid $30 million for two Spirit gates at Chicago’s O’Hare International Airport (ORD). Time will tell whether Spirit merges with another carrier, or sells off some assets and restructures as a smaller, more profitable airline.
I don’t have the chance to fly Spirit often being based in Austin, but the carrier does offer a comfortable product via its Go Big cabin (Spirit’s version of First Class). I flew with the carrier last year between Dallas and New Orleans and had a enjoyable flight. I haven’t been very bullish on Spirit recently but I do want to see the airline succeed. Hopefully this additional funding will allow it to do just that.
Summary
Days after rumors of its collapse circulated online, Spirit Airlines has received additional funding that will allow it to continue operations. The airline also indicated that it is actively pursuing a potential merger as part of its bankruptcy proceedings. This should provide some much needed stability for the airline’s employees and passengers this holiday season.