Why did Spirit Airlines collapse?

Why did Spirit Airlines collapse? A corporate governance education analysis of a major US carrier and how its fortunes declined to complete collapse.

RIP Spirit Airlines. It was one of the most popular carriers in the United States, but in May 2026, it suddenly ceased all operations.  

The collapse was cruelly abrupt. It left thousands of crew members jobless and passengers stranded. Some reported online that they were being “rebooked” onto future Spirit flights, which effectively didn’t exist, because the company couldn’t solidify its messaging to stakeholders in time. 

How did we get here? How did an airline remaining committed to the ultra-low-cost model, which continues to be popular worldwide, see its story end so horribly?

Let’s dive in.

Spirit Airlines saw its fortunes turn with the pandemic, and they never recovered. The company found its business model in financial difficulties as costs spiralled and revenue declined. 

Before the final blow, the airline went through two bankruptcies, attempted to merge with fellow low-cost carrier JetBlue, which was blocked through the courts by the Biden administration. Later, it attempted to secure a bailout from the Trump administration as the Iran war pushed up fuel prices even further. When talks fell through, it proved to be the final straw.

The changing business landscape around Spirit was the primary reason for its demise. In previous decades, its ultra-low-cost model – based on minimalist fares with a price tag on every extra from seat selection to carry-on bags – may have worked. Now, it was being challenged from every direction:

• Other airlines rolled out “basic” fare classes to rival Spirit’s model.
• Longer average flight times and the need to use major airports pushed basic per-flight costs far higher than those of ultra-low-cost carriers in Europe, which have done far better at weathering the turbulence of the 2020s. 
• It had problems with engine providers, forcing it to ground planes. 
• Labour costs skyrocketed.
• Fuel prices remained unsustainably high, with the Iran war being the nail in the coffin.

There will always be an argument that it was an issue when we look back at Spirit’s history, particularly how successful it was in previous decades. Its model boasted high profitability during portions of the 2000s and 2010s, allowing for expansion and, in some cases, market domination. 

To go from that to total collapse indicates a clear failure to adapt, and this responsibility will always fall on the board, who are there to think long-term and ask tough questions even in the best of circumstances. 

That said, Spirit’s case has involved a conveyor belt of rapid-fire challenges through the 2020s. Where other businesses in tough spots might have caught a break, Spirit Airlines entered something of a perfect storm from which there was little hope of recovery. Shifts in consumer preferences were compounded by political pressure and external events that simply made its entire setup redundant in the American aviation economy. 

Pursuing fixes like a revised spending structure and potential mergers and bailouts were sound governance decisions. Still, all were ultimately at the mercy of outside forces like the US government, the courts, and global geopolitics at large. 

In short, it’s been a long time coming, and while Spirit’s board and executives saw the challenge and tried to take steps, they couldn’t stop the enormous tide coming against them.