We've been down this road before … but this time, it feels different. According to a Wall Street Journal report, Spirit Airlines is preparing to cease operations after its $500 million government rescue package fell apart.

The struggling Florida-based airline is now moving forward with plans to liquidate its fleet, and if you're holding a Spirit ticket, you have moves to make today.

According to the Wall Street Journal, Spirit had been negotiating with the Trump administration on a deal that would have given the federal government an option to take a stake of up to 90% of the airline in exchange for the cash infusion. But disagreements inside the Trump administration – combined with pushback from certain Spirit bondholders – sank the package before it could close. Without it, Spirit is running out of cash … fast.

The specific timing is still unclear, but CBS News reports, “Trump administration officials have been told Spirit will be shutting down operations in the next 24 hours.” The President is expected to address the most recent developments later today. 

Spirit is in its second round of bankruptcy in less than two years, and the airline has been buckling under a relentless combination of pressures: jet fuel prices that have doubled since the start of the war in Iran in late February, intensifying competition from major carriers' Basic Economy products, and a mountain of debt the airline couldn't outrun.

We argued last week that even a $500 million bailout wouldn't be enough to fix any of it. We weren't rooting for this outcome – a Spirit collapse means 14,000 lost jobs and higher fares in the markets where it operates… but the writing was on the wall.

 

What it Means if You're Holding a Spirit Ticket

If Spirit ceases operations, your booking is in serious jeopardy. Forget about getting a refund directly from Spirit. In a liquidation scenario, refunds from the airline are unlikely to materialize anytime soon – if at all.

Your best recourse is a credit card chargeback. If you paid with a credit card and Spirit can't deliver the flight, file a chargeback with your card issuer for services you paid for but didn't receive.

Unfortunately, travel insurance probably won't save you here. Most policies – including those built into travel credit cards – explicitly exclude airline insolvency.

For example, the travel protections you get with the Chase Sapphire Preferred® Card specifically exclude “Default of the Common Carrier resulting from Financial Insolvency.” 

The single most important thing you can do today: don't wait. If you have an upcoming Spirit flight, start looking at alternative airlines now or risk paying up later. Cash fares on Spirit's routes are likely to spike as travelers scramble.

 

What it Means for Everyone Else

If Spirit goes by the wayside, fares are bound to go up. We watched it happen in real time at our home airport here in Minneapolis-St. Paul (MSP).

When Spirit pulled out of MSP last December and stopped flying nonstop to Detroit (DTW) and Atlanta (ATL), Delta fares on both routes jumped 50% or more within days.

Now multiply that across every market Spirit served. Frontier and other budget carriers will pick up some demand, but the four major U.S. airlines (Delta, American, United, and Southwest) have spent years building Basic Economy products designed to compete with Spirit on price. With Spirit gone, that competitive pressure eases, and that's bad news for all travelers. 

 

Bottom Line

We've been warning travelers for weeks and now Spirit's time is finally running out. If you've got flights booked on Spirit, get a backup plan in place (today!!) – and brace for higher fares either way.

 

This is a breaking news story. Check back for updates.