The budget airline Spirit Airlines has gone out of business today after suffering financially for many years due to the fuel crisis brought about by the Iran War.
In its statement, the budget airline admitted it had gone through a series of restructuring attempts following two separate bankruptcies filed in 2024 and 2025; however, the sudden increase in fuel prices had left no option but to cease operations altogether.
All flights by the airline have already been called off, with passengers told to expect their refunds but seek flights elsewhere.
Spirit Airlines is owned and operated by Charter One Airlines Inc., founded as Charter One Airlines in 1983 as a charter tour operator. The airline was renamed Spirit Airlines in 1992 when it began operating flights for passengers and became one of the pioneers of the budget airline industry. In 2025, the airline had transported 30 million people, down from 44 million in 2023 and 2024,
President Donald Trump and his Administration considered the possibility of a $500 million government bailout of the Florida-headquartered airline, but it failed to gain the support of bondholders.
What led to the closing of Spirit?
While Spirit had been facing financial struggles for quite some time even before the war with Iran, the energy crisis that occurred due to the closure and subsequent control of the Strait of Hormuz, where 20% of the world's oil flows through, contributed significantly to their demise.
"The sudden and sustained increase in fuel prices in recent weeks" is what Dave Davis, Spirit's president and CEO, gave as the reason for the closure of the airline.
"The cost of keeping the business going requires hundreds of millions of additional dollars of liquidity that Spirit lacks and cannot obtain," he stated in their official announcement. "This is very disappointing and certainly not what we all wanted."
If the prices of fuel were to remain high throughout the year, Spirit's expenses would be expected to escalate by $360 million, according to J.P. Morgan analysts quoted in the Wall Street Journal.
The closure of the airline comes as bigger airlines have found ways to keep up with Spirit's budget-friendly operations over the years. Frequent flyer programs, branded credit cards, corporate tie-ups, and other rewards offered by bigger airlines such as Delta and American have lured budget-conscious fliers away from Spirit.
At the news conference on Saturday, Transportation Secretary Sean Duffy disputed that the cause of Spirit's closure can be attributed to the Iran war.
"Spirit was in dire straits well before the war with Iran," Duffy said. "Its business model was not sustainable. It was unable to achieve fiscal health. Thus, this was not the catalyst. The war was not the catalyst behind Spirit."
Instead, he blamed the Biden administration and its previous Transportation Secretary, Pete Buttigieg, who took legal action against a planned merger between Spirit and its larger competitor, JetBlue, in the year 2023.
attempts to rescue Spirit
Trump had been making efforts to bail out Spirit Airlines in recent weeks by proposing a $500 million federal proposal, which could result in the federal government acquiring anywhere between 80% and 90% of the company.
The President told CNBC’s Squawk Box in April that he would be “happy if someone bought Spirit, it’s 14,000 jobs,” adding that “maybe the federal government should help that one out.”
His comments raised eyebrows among both Republicans and Democrats, who asked whether taking control of Spirit would be the best use of taxpayers’ money.
“Government doesn’t have a clue how to operate a budget airline that can’t even make payroll,” Senator Ted Cruz (Republican from Texas) said on X in April.
Davis stated his appreciation for the Administration’s efforts in “trying to protect jobs and service all across the nation.”
On Saturday, Duffy and the Department of Transportation revealed that other airlines have placed restrictions on the prices of tickets that Spirit passengers may purchase for alternative flights.
What about other budget carriers?
In light of the outbreak of the U.S.-Israeli offensive against Iran which started on Feb. 28, the cost of jet fuel has surged up almost by 70 percent in the United States, based on the Argus U.S. Jet Fuel Index.
This is affecting practically everyone involved in this industry – both airlines and passengers.
This spike in prices is affecting everyone, especially passengers, as airlines seek to cut expenses and offset higher fuel costs by raising the prices of tickets and baggage fees. According to Kayak's data, a trip abroad originating from the United States has become more expensive by nearly 37 percent since the start of the war.
However, small airlines face tough decisions due to the razor-thin profit margins that they have. The Mexican holiday airline Magnicharters stopped flying for two weeks in the middle of April, leaving many passengers stranded in vacation spots such as Cancún, Mérida and Huatulco.
Ryanair, the biggest European airline, has also announced that it might consider reducing routes and cutting capacity, as well as its smaller competitors from Europe and Asia, such as Vietnam Airlines, AirAsia and Scandinavian Airlines.
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