Major Airline Faces Collapse Due To High Fuel Prices: What CA Travelers Should Know

Facing pressure from ongoing bankruptcy and rising fuel costs, Spirit Airlines is at risk of suddenly shutting down in the coming days and leaving travelers in the lurch, according to multiple reports.

The company is facing such a financial squeeze from the rapid increase in jet fuel prices spurred by the U.S. war with Iran that it may have to sell off its assets as soon as this week, Bloomberg reported on Wednesday. The airline maintains a hub in Southern California where dozens of Spirit flights come and go daily.

Such a sudden liquidation, if it were to happen, could mean that customers planning to fly on Spirit in the immediate future could find that they have tickets for an airline that essentially doesn't exist anymore.

The ultra-low-cost carrier emerged from bankruptcy in March 2025 but is now seeking court approval for its second bankruptcy exit plan in about a year.

Its restructuring plan was built on fuel costs averaging ‌about $2.24 per gallon in 2026 and $2.14 in 2027. But jet fuel prices are already double the level assumed in its projections — $4.24 a gallon this week, according to Reuters.

If fuel costs stay at their current levels, Spirit would end up operating at a significant loss — about 20 percent below break even. Creditors have already raised concerns that there's so little room for error in the airline's plan, Reuters reported.

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The company is aware of the risk: In its latest annual report, executives 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, according to Reuters.

Spirit services the Burbank, Los Angeles and Orange County airports. It previously served Oakland, Sacramento, San Jose and San Diego, but pulled out of those cities in October. That was about a month after it filed for Chapter 11 bankruptcy protection.

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Over the last year, Spirit has been cutting routes as part of its restructuring. It had more than 200 planes at the time it filed for bankruptcy and dropped to 80 by the end of 2025,CBS News reported.

There are currently no publicly announced plans for Spirit to shutter, and flights are continuing to operate as planned.

The airline, however, is urging travelers to monitor their flights closely.

Travelers may not be able to recoup the cost of cancelled flights.

Spirit ticket holders are urged to have backup travel plans and may be able to dispute the cost of a cancelled flight with the bank if a credit card was used to purchase the ticket.

Alternatively, they could file a claim in bankruptcy court in hopes of delayed compensation.

Travelers may also want to buy traveler's insurance and avoid buying flights to far in advance amid the turmoil.

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