BLOG — Jun 13, 2026
Spirited away: when oil price starts hitting airline companies
Rising oil prices amid escalating Middle East conflict appeared to be the final catalyst for Spirit Airlines, LLC (“Spirit” or the “Company”), accelerating the deterioration of a business already weakened by persistent losses, elevated leverage, and prolonged liquidity strain. Once a pioneer of the ultra-low-cost carrier model and one of the largest budget airlines in the U.S., Spirit ceased operations in May 2026 after repeated restructuring efforts failed to restore financial stability.1,2
However, its deteriorating credit profile had been evident much earlier, as illustrated in Figure 1.
Figure 1: Spirit Aviation Holdings3 EWS Signal Trend
Source: S&P Global Market Intelligence as of May 11, 2026. For illustrative purposes only.
Starting in October 2023, S&P Global Market Intelligence Early Warning Signals (EWS)4 shifted from green to amber, while the Company’s RiskGauge™ probability of default (PD) mapped credit score declined from b+ to b, indicating rising default risk. By January 2024, EWS escalated to red and the credit score deteriorated further to b-, approximately ten months ahead of Spirit’s first Chapter 11 filing in November 2024, reflecting mounting financial pressure and the termination of its proposed merger with JetBlue Airways Corporation. These scores are model-generated credit risk assessments and are distinct from the credit ratings issued by S&P Global Ratings.
Although Spirit emerged from Chapter 11 restructuring in early 2025, EWS remained persistently red. Meanwhile, the credit score deteriorated further, falling from ccc+ to cc, signaling sustained credit stress and limited recovery prospects. In August 2025, Spirit filed for Chapter 11 protection for a second time, underscoring the limited effectiveness of its prior restructuring and the persistence of its financial challenges.
With restructuring efforts failing to restore stability, the Trump administration, the U.S. administration at the time, explored a potential rescue package in April 2026 to stabilize Spirit amid surging fuel costs.5 However, creditor resistance and funding constraints derailed the proposal, leaving the Company with limited alternatives before its eventual shutdown in May 2026.
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1 For more details, please refer to Spirit-Airlines-Begins-Orderly-Wind-Down-of-Operations.pdf.
2 Source: The S&P Capital IQ® Platform.
3 Parent company of Spirit Airlines, LLC.
4 For more details, please refer to the Early Warning Signals Framework White Paper.
5 For more details, please refer to Trump administration nears $500 million Spirit rescue as Iran fuel shock hits airlines | Reuters.