Spirit Airlines Seeks Court Authorization to Sell or Abandon Remaining Owned Fleet Following Cessation of All Passenger Operations

Spirit Aviation Holdings, Inc. filed an emergency motion on May 4, 2026, in the United States Bankruptcy Court for the Southern District of New York, seeking authority to sell or abandon its remaining owned aircraft, spare engines, and related equipment as part of a wind-down of operations following the company's complete cessation of passenger service on May 2, 2026.

Company Background and Business Operations

Spirit Aviation Holdings, Inc., together with its direct and indirect subsidiaries — including Spirit Airlines, LLC, Spirit Finance Cayman 1 Ltd., Spirit Finance Cayman 2 Ltd., Spirit IP Cayman Ltd., and Spirit Loyalty Cayman Ltd. — operated as an ultra-low-cost carrier headquartered at 1731 Radiant Drive, Dania Beach, Florida. As of the filing date, the company operated a fleet of 114 Airbus A320 family aircraft.

Of that fleet, 66 aircraft were held under lease arrangements, while 28 aircraft were owned by Spirit and subject to third-party financings and not already subject to a pending sale motion. An additional 20 owned aircraft are subject to a previously entered sale order [ECF No. 991] authorizing their sale free and clear of liens, claims, and encumbrances, which the company intends to honor and close. The company also owned 18 spare engines and certain aircraft equipment-related spare parts, all encumbered by liens under Spirit's revolving credit facility.

Path to Bankruptcy and Wind-Down

Spirit filed voluntary petitions for chapter 11 relief on August 29, 2025. The U.S. Trustee appointed an Official Committee of Unsecured Creditors in September 2025 and an Examiner in October 2025.

On March 13, 2026, the company filed a plan of reorganization, a related disclosure statement, and a restructuring support agreement in which the company and its consenting DIP lenders memorialized their support for the plan. The motion states that the company had advanced substantially toward completing that reorganization.

The motion states that geopolitical events triggered a massive and sustained increase in fuel prices, producing a rapid and unexpected deterioration in the company's liquidity position. The company and its advisors explored all available capital sources and cost-saving measures but determined that sufficient incremental liquidity could not be obtained. The motion further states that no third parties expressed interest in acquiring or merging with the company, and that the business plan underlying the restructuring support agreement was no longer viable.

As a result, Spirit ceased all passenger flight operations at 3:00 a.m. Eastern time on May 2, 2026. The company requested that the Federal Aviation Administration issue a ground stop for Spirit flights to prevent inadvertent dispatches. The motion states that the timing was coordinated to ensure no aircraft were airborne and that crew members stationed away from their home bases had time to secure hotel accommodations.

The Fleet Wind-Down Motion

Filed on May 4, 2026, two days after the operational shutdown, the motion requests court authorization to dispose of Spirit's remaining owned fleet assets on an emergency basis. The motion was filed alongside other motions addressing separate aspects of the company's wind-down.

The motion covers three categories of owned equipment: the 28 owned aircraft subject to financings (excluding those already covered by the prior sale order), the 18 owned spare engines, and various aircraft spare parts.

For owned aircraft, the proposed approach is to pursue a sale only where the applicable lenders agree to fund a sale process through a Sale Process Agreement. Under such an agreement, the relevant counterparties would reimburse Spirit for reasonable out-of-pocket sale-related expenses, and Spirit would not be required to make any representations, warranties, or indemnifications. Where no such agreement is reached — or where a sale cannot be completed in an economically sound manner — Spirit proposes to abandon the aircraft and make them available to the applicable counterparties on an as-is, where-is basis for repossession.

For spare engines and spare parts, Spirit intends to pursue sales where economically feasible, with abandonment as the fallback. The motion states that continuing to carry financing obligations, maintenance costs, and insurance expenses for equipment no longer generating revenue would reduce estate recoveries for all stakeholders.

Tiered Sale Procedures

The motion establishes a tiered framework for sales, calibrated to the estimated transaction value:

• Transactions at or below $1,000,000: No court notice or hearing is required.
• Transactions above $1,000,000 and at or below $15,000,000: Spirit must file a sale notice identifying the equipment, proposed buyer, and proposed price, and serve that notice on designated transaction notice parties. Those parties have 14 days to object. If no timely objection is received, or if any objection is consensually resolved, the sale may proceed without further court order. If an objection cannot be resolved, court approval is required.
• Transactions above $15,000,000: Spirit must file a motion with the court seeking approval.

Transaction Value is defined as the net benefit estimated to be realized by the estate in a private sale, or the book value of the equipment to be sold. For purposes of the sale procedures, Transaction Value is determined without consideration of whether the property is to be transferred free and clear of encumbrances.

Tiered Abandonment Procedures

A parallel tiered framework governs abandonments, based on the book value of the equipment:

• Book value at or below $5,000,000: Spirit must provide seven days' notice to the relevant counterparty and known interest holders. No hearing is required, and abandonment may proceed after that period unless it constitutes DIP Collateral requiring lender consent.
• Book value above $5,000,000: Spirit must file a formal abandonment notice with the court and serve it on the transaction notice parties. Those parties have seven days to object. If no timely objection is received, abandonment may proceed. If an objection cannot be resolved, court approval is required.

Claims arising from any abandonment effected pursuant to the proposed order must be filed within 30 days of the applicable abandonment effective date. Any claim not timely filed would be irrevocably barred.

Upon abandonment, Spirit would make the equipment and related aircraft records available to the applicable counterparty at the equipment's then-current location in as-is, where-is condition. Spirit would maintain existing insurance coverage and storage maintenance programs for each item of equipment until the earlier of the abandonment effective date or the date the applicable counterparty takes possession. Thereafter, Spirit's obligations to insure and maintain the equipment would cease unless otherwise agreed.

Legal Framework

The motion invokes Section 363 of the Bankruptcy Code as authority for the proposed sales, relying on the business judgment standard as applied in the Second Circuit. The motion argues that private sales without a formal auction are appropriate given the company's limited liquidity and the fact that certain owned equipment had already been marketed in connection with the earlier aircraft sale process.

Proposed sales would be conducted free and clear of all liens, claims, interests, and encumbrances under Section 363(f) of the Bankruptcy Code, with encumbrances attaching to net sale proceeds in order of priority.

For abandonments, the motion relies on Section 554(a) of the Bankruptcy Code, which permits a debtor to abandon property that is burdensome to the estate or of inconsequential value and benefit to the estate. The motion states that the abandonment procedures were developed after consultation with the Official Committee of Unsecured Creditors and certain secured lenders, and are consistent with procedures previously approved in this case and in other airline chapter 11 cases.

The motion also requests a modification of the automatic stay under Section 362 to allow counterparties to take possession of, transfer, and dispose of abandoned equipment, and to facilitate aircraft registry administration. Additionally, the motion requests a declaration that making equipment and aircraft records available for pickup satisfies the company's surrender and return obligations under Section 1110(c) of the Bankruptcy Code, to the extent applicable.

The motion notes that Revolving Priority Collateral, as defined in the Amended and Restated Credit and Guaranty Agreement dated March 12, 2025, is excluded from the sale and abandonment procedures without the consent of the revolving credit facility's administrative agent.

Key Parties

Key parties in the case include the Official Committee of Unsecured Creditors, the Ad Hoc Committee of Senior Secured Noteholders, Citibank, N.A. as revolving credit facility administrative agent, Wilmington Trust, National Association as collateral agent, the DIP lenders and DIP facility agent, and the Federal Aviation Administration. An Examiner was appointed in the case in October 2025.

Professional Representation

Spirit's fleet counsel is Debevoise & Plimpton LLP, 66 Hudson Boulevard East, New York, New York 10001.

Key Dates

Court and Case Information

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