Spirit Airlines could be forced to liquidate and leave travelers stranded as jet fuel prices surge because of the war in Iran.
The budget carrier had planned to come out of bankruptcy this summer after reaching an agreement with creditors on a plan to slash debt and reduce operational costs.
But that restructuring plan is now at risk as jet fuel prices put an expected strain on all airlines, according to reports.
When the U.S. and Israel began launching strikes against Iran, Tehran effectively closed the Strait of Hormuz, a major shipping waterway that carries about a fifth of the world’s oil. Oil prices surged as a result, causing a headache for Americans at the pump and for airlines fueling planes.
Spirit Airlines is at risk of being liquidated due to the rising jet fuel prices, Bloomberg reported Wednesday, citing people familiar with the matter.
Spirit had planned for fuel costs averaging about $2.24 per gallon this year and $2.14 next year, Reuters reported, citing its March disclosures. But jet fuel prices have now risen to around $4.24 per gallon, according to the publication.
Bloomberg’s sources said a decision to liquidate could come as soon as this week but noted the situation is fluid.
One of Reuters’ sources said while liquidation is possible, it’s not the most likely scenario. The person familiar with the matter added that the airline is not expected to liquidate this week.
Spirit Airlines told The Independent, “We don’t comment on market rumors and speculation. Our operations continue as normal.”
If the carrier were to liquidate, that could spell trouble for ticket holders who expect to catch a flight.
There is "no way of knowing when and if an airline will liquidate, leaving customers stranded,” Katy Nastro, a travel expert with the airfare monitoring site Going, told ABC News.
But Nastro added, “It's been no secret that Spirit has been struggling in the last few years coming out of the pandemic."
The airline filed for bankruptcy last August for the second time in a year. When Spirit first filed for bankruptcy in November 2024, it had lost more than $2.5 billion since 2020.
CBS News’ Senior Transportation Correspondent Kris Van Cleave explained that when airlines have been forced to liquidate, “Historically, when that has happened, airlines essentially go away overnight. So there is the potential, if Spirit is told to cease operations and liquidate, flyers will be stranded.”
“Other airlines already have plans in place to offer what they call rescue fares — discounted one-way fares to get people home,” Van Cleave said in a video posted to social media.
Nastro, the travel expert, has advised Spirit customers not to cancel their booked flights if the airline does liquidate “because then you forfeit your right to a refund if there's still some money left over to be able to do so."
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