34-Year-Old Budget Airline Officially Announces Shutdown As Fuel Prices Surge

• Spirit Airlines announced that it will suspend operations immediately, canceling all flights and marking the end of its 34-year history.
• A spike in jet fuel prices, linked to Iran-related geopolitical tensions, stymied restructuring efforts and strained finances.
• Despite previous bankruptcy filings and restructuring talks, the airline was unable to gain more capital or a $500 million federal rescue.

Spirit Airlines (SAVEQ), a US low-cost carrier, officially announced on Saturday that it would close immediately, ending a 34-year run. 

Its parent company, Spirit Aviation Holdings (FLYYQ), said in a statement that it had started an “orderly wind-down” and all flights were canceled, with passengers told not to go to the airport.

The airline blamed its collapse on a sharp increase in jet fuel prices, driven by geopolitical tensions between Iran and the US. Despite months of restructuring plans and a proposed deal with bondholders earlier this year, Spirit said it was unable to secure the additional liquidity it needed to continue operating. 

“Tremendously disappointing,” Chief Executive Officer Dave Davis said of the shutdown, adding the company was unable to raise the hundreds of millions of dollars it needed to keep the business going. Spirit had gone bankrupt twice in less than two years and had been unable to secure a government bailout.

$500M Bailout Bid Fails

According to reports, this comes after Spirit Airlines' bid for a $500 million rescue package from the federal government failed on Friday, a last-ditch effort to save the budget carrier. 

Speaking to reporters before leaving the White House on Friday, President Trump reportedly suggested that a plan to save the financially troubled airline was still being considered.  "We're looking at it. If we could do it, we'll do it. But only if it's a good deal," Trump said. 

"I want to thank the Administration, in particular Secretary Howard Lutnick and the U.S. Department of Commerce, for their extraordinary efforts to try to preserve jobs and service across the country, along with the U.S. Department of Transportation for their assistance to minimize the disruption to our Guests in the days and weeks ahead," Davis said on Saturday. 

The shutdown will also hit about 17,000 employees. The airlines said in the statement that customers who booked directly with the airline will get automatic refunds, while others may need to seek reimbursement through agents or the ongoing bankruptcy process. 
On Stocktwits, retail sentiment around Spirit Aviation stock remained in the ‘bullish’ zone, while chatter around it stayed at ‘extremely high’ levels over the past day.

U.S. benchmark WTI crude futures were trading at $102.50 per barrel, down 2.45% on the day, on the back of disruptions related to the Iran conflict, and are putting considerable pressure on fuel-intensive industries such as aviation.  

At Friday's close, most Aerospace & Defense ETFs declined. The SPDR S&P Aerospace & Defense ETF (XAR) declined 1.04% to around $256, while the iShares U.S. Aerospace & Defense ETF (ITA) closed at around $216, down over 1%. In late trading, both ETFs had a gain, with ITA rising by 0.11% and XAR gaining 0.43%. 

On Stocktwits, retail sentiment around XAR and ITA remained in the ‘bullish zone, while chatter stayed at ‘normal’ levels over the past day. 

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