Spirit Airlines, the budget carrier known for its no-frills bright yellow planes, has filed for bankruptcy protection for the second time in less than a year. The move comes only months after the airline emerged from a Chapter 11 reorganization in March.

The company emphasized that operations will continue during the restructuring process. Passengers can still book flights and use existing tickets, credits, and loyalty points. Employees and contractors will also continue to be paid.

CEO Dave Davis acknowledged that while the previous restructuring reduced debt and raised capital, it wasn’t enough. “It has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” Davis said.

Earlier this month, Spirit Aviation Holdings — the airline’s parent company — warned investors that it had “substantial doubt” about its ability to remain solvent over the next year. The company cited weak demand for domestic leisure travel, rising costs, and ongoing operational uncertainties that it expects will persist through at least the rest of 2025.

Pandemic and financial woes

Spirit has been struggling to recover since the COVID-19 pandemic, which crushed demand and pushed the airline deep into the red. Since 2020, the carrier has lost more than $2.5 billion. Rising operational costs and mounting debt forced Spirit into its first bankruptcy filing last November.

When the airline exited bankruptcy in March, it had successfully restructured some of its debt and secured new financing. Still, mounting challenges have made further cuts necessary. Last month, Spirit announced plans to furlough 270 pilots and downgrade 140 captains to first officers beginning in October and November, aligning with reduced projected flight volumes for 2026. These cuts follow earlier rounds of furloughs and layoffs tied to its first bankruptcy.

Despite these measures, Spirit has warned it still needs additional cash. The airline is considering selling aircraft and real estate to strengthen its financial position.

A tough market for discount airlines

Spirit’s troubles are compounded by competitive pressures. Larger airlines have increasingly lured budget-conscious travelers through their own tiered ticket options, eroding Spirit’s market share. In response, Spirit has begun rolling out higher-priced fares with added amenities in an attempt to capture more upscale travelers.

The carrier’s relatively young aircraft fleet has made it an attractive target for takeover bids, but attempts by rivals JetBlue and Frontier have failed.

Today, Spirit operates more than 5,000 flights across 88 destinations, including the U.S., Caribbean, Mexico, Central America, Panama, and Colombia. Whether its latest bankruptcy effort will allow it to stabilize or make it vulnerable to acquisition remains to be seen.