What happens if Spirit Airlines shuts down?

Added: 2026-05-08

[00:00:00]Now, the war has also sent jet fuel prices sky-high, and that may end up being the final nail in the coffin for Spirit Airlines. The struggling budget airline could shut down as soon as Saturday, barring a last-minute intervention. Spirit asked for $500 million government bailout. President Trump said the government gave Spirit a final proposal.

[00:00:22]We're looking at it, but if we can't make a good deal, no institutions been able to do it. I said I'd like to save the jobs, but we'll have an announcement sometime today. We gave them We gave them a final proposal.

[00:00:35]Now, a spokesperson for Spirit Airlines declined to comment on any ongoing discussion, saying only that their flights are operating as scheduled. But I want to bring in CBS News Travel Editor Peter Greenberg. Peter, great to see you. So, what happens when a major airline like this shuts down?

[00:00:53]Well, they liquidate, meaning they cease to operate. Their tickets are no longer valid. They will not be accepted by any other airline without a substantial fare difference. And at that point, whatever assets they have left get auctioned off by a conservator. This has happened before. In this situation, Spirit doesn't have very many assets left. They have a couple of gates and landing slots, but their planes are leased. They already gave back half their planes to the leasing companies because they couldn't afford to operate them. And you know, when you define an airline like Spirit as a low-cost airline, that's really a disservice because there's no such thing as a low-cost airline anymore, cuz they have to pay for the fuel at the same rates as everybody else does. Their labor costs are high. Their other equipment and and and service and goods costs are high. Their only competitive advantage since day one was to offer low fares. But those low fares won't give them the revenue they need to even pay the gas bill, and that's where they are today. Now, Peter, we should mention United and American Airlines just released statements saying they are prepared to support Spirit customers and employees, but didn't get much detail other than that. American added they are immediately capping main cabin fares on certain Spirit routes. So, for customers holding Spirit Airline tickets, would there be refunds or rebookings on other airlines? It sounds like United and American may may take some of those bookings, but what would you recommend to folks who have a flight booked for Saturday or Sunday on Spirit? Would you recommend that they be proactive and cancel those tickets and rebook?

[00:02:20]There's no point in canceling those tickets unless Spirit stops to operate, meaning you know, there used to be a gentleman's agreement among airlines 25 years ago that if one airline was in trouble or had a strike or a labor action, the other airline would honor their tickets. Those agreements have long since expired. If American and United are offering to do it, what they're not telling you is the details.

[00:02:39]Will there be a fair a fair differential that passengers will have to pay? Will they be confirmed space tickets? I doubt it. Uh they'll be standby tickets. Uh however, if you paid for a Spirit Air ticket with a with a credit card, and almost 99% of the people do, then you're protected under the federal credit law to get your money back from the credit card company. That doesn't put you on another airplane right away, but at least right now, if you've got that Spirit ticket, hold on to it until you hear otherwise.

[00:03:04]So, what would the impact be though on the airline industry as a whole and and ticket prices if Spirit is no more as of this weekend?

[00:03:13]Well, when you shrink capacity and demand stays high, the equation is simple to understand. Airfares have nowhere to go but up, and that that's what's happened historically. That's what will happen again now, and airfares are already going up between 17 and 20% because of the fuel prices. United Airlines already announced that. So, we're seeing fuel prices right now that are 70% higher than they were back in February. That's unsustainable for most airlines, especially the low-fare carriers like Spirit, Frontier, Avelo, and Allegiant. JetBlue was facing a filing of a of a Chapter 11 just 2 weeks ago. At least they had assets to pledge.

[00:03:47]So, they pledged 20 of their airplanes to secure a $500 million loan. That was their collateral to to stay flying through 2026, but there's no guarantee that they just haven't kicked the can down the road.

[00:03:59]Peter Greenberg, always good to see you, sir. Thanks so much.

[00:04:02]You got it.