Spirit Airlines begins orderly wind-down after failing to reach deal for bailout lifeline

Spirit Airlines said early Saturday it has begun an orderly wind-down of its operations effective immediately, marking the end of a long struggle with rising costs and a recent surge in fuel prices.

“To our Guests: all flights have been cancelled, and customer service is no longer available,” Spirit said on its website, which replaced its booking facility with the announcement and guidance for customers and vendors.

“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,” the airline said.

Earlier, people familiar with the matter said the iconic budget airline was preparing to shut down after it failed to reach a deal for a lifeline. The people requested anonymity because they weren’t authorized to speak about the discussions.

The airline cited surging energy prices as a key reason for the shutdown.

“Unfortunately, despite the Company’s efforts, the recent material increase in oil prices and other pressures on the business have Significantly impacted Spirit’s financial outlook,” the airline said in a separate statement.

“With no additional funding available to the Company, Spirit had no choice but to begin this wind-down.”

Spirit said 17,000 direct and indirect employees have lost their jobs.

Passengers should not go to airports for their flights, but instead referred them to an FAQ for more information and next steps on how to pursue refunds and retrieve lost baggage, the airline said.

Spirit also said it had hoped to work with its vendors for the long term.

“We are committed to working with our vendors through the wind-down process and will be in touch in the coming days to discuss next steps. Any outstanding claims will need to be addressed through the bankruptcy process,” Spirit said. It added that vendors will receive direct communication from courts.

The Trump administration last month had offered a $500 million loan that could have given the government up to a 90% stake in the Florida-based airline. But talks with bondholders for a government bailout this week failed to yield a deal.

President Donald Trump said earlier Friday that his administration had extended a “final” bailout proposal.

“I would say we’re driving a tough deal, but it’s one of those things we will do it, or we won’t,” Trump told reporters on Friday. “Seems like the other lenders are blocking. They think they’ll get bumped down in priority.”

“We come first,” Trump said.

The Wall Street Journal reported earlier that Spirit was preparing to shut down.

Other airlines said Friday that they have plans to help fly Spirit customers and crews if Spirit stops operating.

Spirit, which pioneered the budget airline model of low fares and fees for everything else in the U.S., had been profitable, but it was struggling in recent years. It faced rising labor and other costs, changing consumer tastes toward more upscale travel and an engine recall. A planned acquisition of Spirit by JetBlue was successfully challenged by the Biden administration two years ago.

The airline had expected to emerge from bankruptcy midyear before the jump in fuel prices.

Spirit flew around 1.7 million U.S. domestic passengers, with a 3.9% market share in the U.S. market, as of February, according to aviation data firm Cirium. That was down from 5.1% market share last year, as the airline axed flights to cut costs.

As of Friday at 6:25 p.m., Spirit had 44 flights operating, according to Flightradar24.

The White House, the Department of Transportation and the Commerce Department didn’t immediately respond to requests for comment.

The airline’s lawyer, Marshall Huebner, told a bankruptcy court in New York on April 23 that Spirit’s cash “is not going to last for very much longer.”

As of 5:30 p.m. ET, Spirit was still selling tickets on its website.

The carrier is in its second bankruptcy in less than a year and now has the added challenge of a spike in jet fuel prices amid the Middle East conflict.

Southwest Airlines said it has options for customers holding Spirit reservations. Frontier Airlines offered Spirit customers with up to 50% off base fares.

United Airlines said in a statement Friday the carrier is “preparing to support Spirit customers and employees” if Spirit shuts down and strands crews and passengers, a spokeswoman told CNBC.

Also on Friday, American Airlines said it had “immediately implemented fare caps on Main Cabin tickets for Spirit routes where we also offer nonstop service and will continue to support as many customers as possible.”

JetBlue Airways also said it would provide passengers and crews affected by a potential Spirit shutdown with flight options.