Spirit Airlines stock craters on warning it could go out of business

Spirit Aviation Holdings (FLYY) stock, the parent company of troubled Spirit Airlines, tumbled on Tuesday after the airline operator said it was running out of cash and could soon go out of business.

“The Company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel in the second quarter of 2025, resulting in a challenging pricing environment,” Spirit said in its second quarter financial disclosure. “As a result, the Company continues to experience challenges and uncertainties in its business operations and expects these trends to continue for at least the remainder of 2025.”

Though the company was trying to alleviate its financial situation with initiatives such as pilot furloughs, spare engine sales, and potential sales of aircraft, real estate, and excess airport gate capacity, the “uncertainty of successfully completing the initiatives” meant that management felt there was “substantial doubt as to the Company’s ability to continue as a going concern” over the next 12 months.

Spirit Aviation stock cratered over 40% in midday trade, while shares of major operators like Delta (DAL), American (AAL), and United (UAL) surged nearly 10%.

Read more about Spirit Aviation’s stock moves and today’s market action.

Spirit Aviation Holdings emerged from Spirit Airlines’ financial restructuring on March 12 and has faced a difficult time ever since.

The bankruptcy was brought on following a failed takeover by JetBlue Airlines, with both carriers citing regulatory issues standing in the way of the merger both desired. This followed Spirit’s rejected overtures from budget operator Frontier earlier in the year, after Frontier rejected Spirit’s counteroffer.

Spirit’s reorganization resulted in taking on $795 million in debt, bringing in $350 million in new equity, and setting up a $275 million credit line.

Spirit is in a bind because the minimum liquidity requirements of its debt obligations and collateral required by its credit card processing agreements require the company’s operations to improve faster than it anticipated.

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New CEO Dave Davis has been implementing the current strategy of appealing to higher-spending travelers with a premium economy program, updating Spirit’s frequent flier program, and announcing new partnerships with other airlines and travel businesses to boost demand.