Spirit Airlines is planning to wind down operations after a proposed $500 million U.S. government deal to rescue the carrier apparently has fallen apart, according to the Wall Street Journal.
The government deal would have helped to sustain the carrier before it ran out of cash, but there were disagreements in the Trump administration about the bailout, and some Spirit bondholders were against the deal, "convinced it would have hurt them economically," according to the report.
The ultra-low-cost-carrier was one of the first of its kind and initially was successful, but it has been on a rocky path since the Covid-19 pandemic. Spirit also has been facing significant cost pressures from recent higher fuel prices, as have most carriers.
Spirit is in bankruptcy protection for the second time in as many years, emerging from its first bankruptcy in March 2025, after which its CEO at the time, Ted Christie, stepped down, only to file again in August.
The carrier in December obtained $100 million in additional funding, it also began cutting capacity, selling aircraft and selling some gates.
Prior to filing for bankruptcy the first time, Frontier Airlines in February 2022 had agreed to acquire Spirit in a $2.9 billion deal. But two months later, JetBlue made a competing bid. A bidding war ensued until JetBlue won out in July 2022 with a $3.8 billion offer, only to have the deal terminated in March 2024 after a U.S. judge in January of that year ruled against the merger in a civil lawsuit brought by the U.S. Department of Justice.
Frontier in January 2025 made another attempt to acquire Spirit, but it didn't move forward. The two carriers allegedly were in talks a third time in December 2025, according to Bloomberg.
The WSJ report noted that Spirit was moving to liquidate its aircraft fleet and shut down, but timing on that was unspecified.
TD Cowen airline analyst Tom Fitzgerald noted in commentary that Spirit "had already shrunk materially from its 2023 peak and currently represents around 1.8 percent of U.S. domestic capacity." He added that Frontier has the most direct overlap with Spirit and the most similar business model, but the United Airlines and JetBlue Blue Sky partnership was "best positioned to capture the revenue over time."
Aviation analytics company Cirium noted that Fort Lauderdale, Fla., was the destination with the highest number of Spirit flights in 2025, at more than 29,000. JetBlue has been making inroads in Fort Lauderdale over the past year, expanding its network there and considering it as a potential third location for its BlueHouse airport lounge.
Orlando had the second-most Spirit flights in 2025 with nearly 20,500, according to Cirium, followed by Las Vegas with more than 16,200 and Detroit with nearly 11,800.
A Spirit spokesperson declined to comment on ongoing discussions. "Spirit is operating as usual," the spokesperson wrote in an email.