Spirit Airlines reaches restructuring deal with lenders, aims to cut $5.3B debt

Spirit Aviation Holdings said it reached an agreement in principle with its existing debtor-in-possession lenders and secured noteholders on Feb. 24, 2026, a move the company said will enable it to exit Chapter 11 in late spring or early summer. The company described the deal as a crucial step to complete a restructuring that management says will streamline the airline’s fleet, network and cost structure.

"Spirit has completed another significant milestone in its restructuring by reaching an agreement in principle on the key terms of a restructuring support agreement with its existing DIP lenders and secured noteholders," the company said in a release. "The agreement in principle will provide Spirit with the financial support needed to finalize its restructuring and complete the remaining changes necessary to optimize the Company's fleet, network and cost structure." Spirit added that "Guests can continue to book, travel and use tickets, credits and loyalty points as normal."

Management framed the outcome as a sharpening of the airline’s low-cost offering. "This agreement in principle is the result of months of hard work and allows Spirit to move toward completing its transformation. Spirit will emerge as a strong, leaner competitor that is positioned to profitably deliver the value American consumers expect at a price they want to pay," said Dave Davis, president and chief executive officer. Davis also thanked employees and customers for their support during restructuring.

Independent reporting cited by multiple outlets indicates the restructuring is expected to materially shrink Spirit’s obligations, with debt and lease commitments reportedly falling from $7.4 billion pre-filing to roughly $2.1 billion post-emergence. That roughly $5.3 billion reduction, if reflected in court filings, would significantly alter the carrier’s balance sheet and cost profile, potentially widening its price advantage against legacy airlines.

Operationally, the company said it will continue efforts to optimize capacity and costs. Press accounts reported plans to rationalize the network toward higher load-factor routes and peak flying, expand aircraft utilization in busy periods, reduce off-peak flying and make changes to product mix. Aviationbusinessnews and Morningstar reported that Spirit will move away from a strict pure-play low-cost model to add First and Premium Economy options and enhance its Free Spirit and co-brand loyalty programs.

The move comes amid continued strain across lower-cost carriers. Morningstar noted that Spirit Aviation Holdings filed for bankruptcy in August, describing that as the company's second filing within a year in attempts to shore up its balance sheet. The Chapter 11 pathway and a negotiated restructuring are increasingly common tools for carriers seeking to reset onerous lease and debt burdens while maintaining operations.

Market and policy implications will hinge on the final RSA and court approval. Investors and competitors will watch whether the reduced leverage and planned cost cuts translate into lower fares for consumers or simply restore profitability while keeping capacity constrained. Regulators typically focus on antitrust and consumer protection issues when airlines merge or shrink networks, though a financial restructuring generally draws less direct regulatory scrutiny than a merger.

Next steps for verification include finalizing the restructuring support agreement, filing RSA terms with the bankruptcy court, and confirming which creditor groups signed on. Company officials did not disclose specific lender names in the release. Observers will also look for detailed disclosures on fleet size, route changes, and any workforce recalls or reductions as court documents and management guidance are filed.