North America

Can Spirit Airlines Survive?

Jay Shabat and Meghna Maharishi
A Spirit Airlines plane at an airport gate.

Photo Credit: A Spirit Airlines plane at an airport gate.  Adobe Stock / Olga

Skift Take

Spirit’s survival looks increasingly doubtful as its ultra-low-cost model falters, while Air Canada faces a costly labor reckoning that could reshape its near-term fortunes.

In the first half of the pod, the hosts look at the state of Spirit Airlines.

Spirit is in deep financial trouble, having exited bankruptcy in March but now facing renewed uncertainty after issuing a “going concern” notice, warning it might not survive another 12 months without new cash. Its financial performance in 2025 has been bleak, with negative operating margins (-29% in Q1 and -18% in Q2). Jay and Meghna look at four potential scenarios:

  • Another bankruptcy restructuring – risky if funding and creditor trust are not secured.
  • Liquidation – selling assets until collapse.
  • Merger – most likely with Frontier, though JetBlue remains a distant possibility.
  • Market recovery – improved demand and capacity adjustments could stabilize the airline.

The broader ULCC (ultra-low-cost carrier) model faces structural headwinds, as demand shifts toward premium and international travel. Shrinking undermines the model’s growth-driven economics, making profitability harder to achieve.

Air Canada's woes seem better in comparison, and Jay and Meghna turn to those for part 2. Air Canada faced a crippling strike by flight attendants during peak summer travel, grounding operations for several days. The financial fallout is expected to be steep: analysts project a $300 million hit to earnings, nearly a quarter of its 2024 operating profits.

Before the strike, Air Canada was performing relatively well, with a 7% operating margin in Q2 2025 (lower than U.S. peers but solid compared to past results). Seasonal strength in Q3 usually drives profits, making the strike especially damaging. Looking ahead, Air Canada must decide how to replace its aging Boeing 777-300 fleet. Options include the Airbus A350 (politically and operationally attractive) or Boeing’s 777X, though U.S.-Canada trade politics may influence the decision.

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Five Key Takeaways

  1. Spirit Airlines faces existential risk – with bankruptcy, liquidation, merger, or recovery as possible paths, but its ULCC model looks increasingly unsustainable in today’s market.
  2. Structural industry shifts hurt ULCCs – post-pandemic demand favors premium and international travel, squeezing carriers like Spirit and Frontier that rely on dense domestic leisure routes.
  3. Air Canada’s strike shows labor power – flight attendants achieved rare wins like boarding pay, setting precedents for North American labor negotiations.
  4. Financial impact on Air Canada is major – losing nearly a quarter of annual operating profits during peak season could drag down 2025 results despite prior momentum.
  5. Fleet and strategy decisions loom – Air Canada’s choice between Airbus and Boeing for widebody replacements could shape its competitive and political positioning in the next decade.