Fuel surge threatens Spirit Airlines bankruptcy exit, raises liquidation risk

Source: Reuters

Fuel surge threatens Spirit Airlines bankruptcy exit, raises liquidation risk

By Rajesh Kumar Singh, Doyinsola Oladipo and Dietrich Knauth
April 16, 2026 4:46 PM EDT Updated 13 hours ago

CHICAGO/NEW YORK, April 16 (Reuters) - Spirit Airlines' bankruptcy exit plan is ​under renewed pressure after a sharp rise in jet fuel prices undermined key assumptions behind its restructuring.

The ultra-low-cost carrier built its turnaround on fuel costs averaging ‌about $2.24 per gallon in 2026 and $2.14 in 2027, based on its March disclosures. By mid-April, jet fuel prices were around $4.24 a gallon, roughly double the level assumed in its projections.

J.P. Morgan estimates that if fuel stays near current elevated levels, Spirit's forecast 2026 operating margin could deteriorate to about negative 20%, from the 0.5% margin the airline assumed in its restructuring plan. That would add about $360 million in incremental costs, more than the airline's ​year-end unrestricted cash, according to the bank.

Spirit has already flagged the risk. In its latest annual report, the airline said the recent increase in fuel prices would have ​an "immediate and substantial negative impact" on results and warned that if higher costs make it harder to reach agreements with creditors and other stakeholders, ⁠it could be forced to liquidate. Spirit in an email to pilots on Thursday, seen by Reuters, said the airline continues to operate normally.

-snip-

Read more: https://www.reuters.com/business/autos-transportation/fuel-surge-threatens-spirit-airlines-bankruptcy-exit-raises-liquidation-risk-2026-04-16/