Washington, United States. Bankrupt discount carrier Spirit Airlines ceased operations on Saturday after failing to secure creditor support for a U.S. government bailout plan, becoming the first industry casualty linked to the Iran war. Spirit said it is winding down operations and has canceled all flights.
Failure to reach rescue agreement
A Spirit board meeting ended without an agreement to rescue the company, a person close to the discussions told Reuters late on Friday. Spirit said in a statement that a material increase in oil prices and other pressures had significantly impacted its financial outlook, and announced “an orderly wind-down of operations.”
The company said all flights have been canceled and asked passengers not to go to the airport. A spokesperson said Spirit had notified the Federal Aviation Administration before halting operations and declined to comment further.
Impact of fuel prices and the Iran war
The collapse follows a doubling in jet fuel prices during the two-month-old Iran war, a development expected to cost thousands of jobs. Global carriers are contending with surging jet fuel prices after the U.S.-Israeli strikes on Iran disrupted traffic through the Strait of Hormuz, while Spirit was already struggling to turn a profit before the fuel shock.
Market role and scale of operations
No U.S. carrier of Spirit’s size, which accounted for 5% of U.S. flights at one point, has liquidated in two decades. Spirit helped keep fares lower in markets where it competed against major carriers.
Spirit had 4,119 domestic flights scheduled between May 1 and May 15, offering 809,638 seats, according to aviation analytics firm Cirium.
Political and business context
The collapse is a blow to President Donald Trump, who had proposed $500 million to save Spirit despite opposition from some of his closest advisers and many Republicans in Congress.
Spirit built its brand around affordable fares for budget-conscious travelers willing to forgo add-ons such as checked bags and seat assignments.
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