Last Saturday morning, Spirit Airlines sent a message to its customers telling them not to go to the airport. All flights were cancelled. The airline was done.
After 34 years, 17,000 jobs, and two previous bankruptcy attempts and the Iran war finished it off.
And Spirit isn’t the last one.
What Happened to Spirit
Spirit’s restructuring plan assumed jet fuel would cost $2.24 a gallon in 2026. By the end of April, jet fuel was $4.51 a gallon, more than double. The airline couldn’t survive without new financing and a Spirit board meeting ended without an agreement to rescue the company. The Motley Fool
Trump proposed a $500 million government bailout despite opposition from his own advisers and Republican congressmen. No other airline would buy Spirit either. Transportation Secretary Sean Duffy tried to find a buyer and came up empty. “What would someone buy?” he asked. “If no one else wants to buy them, why would we buy them?” A creditor close to the deal said: “The Trump administration made an extraordinary effort to try and save Spirit, but you can’t breathe life into a corpse.” The Washington Post
No US carrier of Spirit’s size – it accounted for 5% of US flights at one point, has liquidated in two decades. The Washington Post
Why Jet Fuel Is the Problem
Jet fuel is the second largest cost for airlines, just behind labour. A single-aisle commercial jet burns roughly 800 gallons an hour. Widebody aircraft burn even more. The four largest US airlines — United, American, Delta, and Southwest; spent about $100 million a day combined on fuel last year. Yahoo Finance
Jet fuel prices have doubled in Europe over the past year to $187 per barrel as of May 1. That’s not a small increase. That’s a cost that fundamentally breaks the business model of any airline running on thin margins, which is every budget airline on earth. NBC News
The US is not in immediate danger of running out of jet fuel, but the global shortage is driving up fuel prices for US carriers regardless. Even if the US and Iran reached a deal today, it would take until at least July for fuel supplies to normalise and even that may be optimistic. Yahoo Finance
Which Airlines Could Be Next
Spirit was the weakest. It won’t be the only one.
Ryanair CEO Michael O’Leary has publicly warned that Wizz Air and Air Baltic are the most vulnerable European carriers to collapse if oil prices hold at current levels. Ryanair itself faces an additional $50 million in fuel costs for April alone, with projections reaching $600 million over a full year if oil stays at $150 per barrel. Wikipedia
Ryanair has partly protected itself – they locked in 80% of their fuel at $67 per barrel before the conflict, with coverage extending until March 2027. But the remaining 20% purchased on the open market now costs more than double pre-war levels. O’Leary confirmed that oil companies have assured supply through May, but June remains uncertain. Wikipedia
Lufthansa (one of Europe’s biggest carriers) has already slashed 20,000 short-haul flights through October due to fuel costs. United has cut its planned schedule by 5% over the next six months. American Airlines cut its full-year earnings forecast by nearly 40%. These aren’t budget carriers. These are the big established airlines making significant cuts. NBC News
Fitch Ratings warned that financially weaker airlines carrying high debt and facing fuel cost volatility “could default and/or return aircraft early.” A shakeout among discount carriers that removes cheaper flights from the system could cause fares to rise across the board. Yahoo Finance
What This Means for Your Summer
Here’s the part that affects you directly.
Even if the US and Iran reach a deal today, the die is cast for summer travel. Airlines are planning routes and setting fares months in advance. The prices being set right now for July and August flights reflect today’s fuel costs, not what fuel might cost if a deal gets done next week. Yahoo Finance
NPR’s aviation correspondent put it simply: even if the war ended tomorrow, oil prices are likely to stay elevated for a while, and airlines are not going to be in a hurry to lower fares back to pre-war levels. Airline leaders have signalled they expect some of these price hikes to stick even into next year. Yahoo Finance
Several European countries may start to face shortages of jet fuel in the next six weeks, the International Energy Agency warned. The airports association warned that fuel shortages would hit Europe if exports through the Strait of Hormuz don’t resume in a significant and stable way — and oil flows did not normalise in April. NBC News
The advice from aviation analysts is unanimous: if you haven’t booked your summer flights yet, book now. Waiting to see if prices fall is not a strategy. They won’t.
The Bottom Line
Spirit Airlines is gone. Seventeen thousand people lost their jobs. Passengers are scrambling to rebook. Jet fuel doubled in two months because one waterway in the Middle East closed.
Lufthansa cut 20,000 flights. United cut its schedule. American slashed its earnings forecast. Ryanair is warning its rivals could go bankrupt.
And your summer flights – if you haven’t booked them, they are going to cost significantly more than they would have in January.
This is what an oil price shock looks like when it leaves the charts and hits real life.
Book your flights. Don’t wait.
