Spirit Airlines at the Cliff Edge: Assumption Brittleness and the Arithmetic of the April 2026 Plan

EXECUTIVE SUMMARY

Spirit Airlines (NK), the Miramar-headquartered ultra-low-cost carrier now operating its second Chapter 11 in fourteen months, faces a mathematical liquidity shortfall that its April 6, 2026 Plan of Reorganization was never stressed to absorb. The plan, finalized before the February 28, 2026 outbreak of hostilities in Iran, assumed jet fuel at $2.24 per gallon for 2026 and a positive 0.5% operating margin at emergence. Spot jet fuel reached $4.32 per gallon on April 16and has averaged above $3.79 since early April. J.P. Morgan aviation analyst Jamie Baker has modeled a scenario in which sustained $4.60 per gallon fuel compresses 2026 operating margin to roughly negative 20% and adds approximately $360 million of incremental cost against a year-end 2025 cash balance of $337 million. (1)(2) At face value, the arithmetic does not clear.

Two observations follow that have not been developed in the current wave of trade-press coverage. First, Spirit’s April 6 disclosure statement is the rare recent case in which a confirmable Chapter 11 plan was produced without a defensible stress band on the single input variable that drives airline profitability. The US Trustee’s April 14, 2026 objection to the disclosure statement, citing adequate information deficiencies, confirms that the bankruptcy court now shares this concern. (3) Second, whatever scenario resolves the Chapter 11 produces an immediate and measurable demand shock to commercial real estate in the markets where Spirit concentrates capacity. Headquarters in Miramar, crew bases at Fort Lauderdale-Hollywood and Miami International, and a leisure-heavy route network anchored by Fort Lauderdale, Myrtle Beach, Atlantic City, Las Vegas, Orlando, Detroit, Baltimore, and Caribbean and Latin American gateways collectively define a CRE exposure band that has not been quantified publicly.

This analysis reconstructs the anatomy of Spirit’s assumption failure, maps the regional CRE exposure, and prices the outcome set under four scenarios: federal equity injection, modified plan confirmation with further fleet contraction, 363 asset sale to a strategic acquirer, and Chapter 7 liquidation. The probability-weighted RevPAR impact across the top ten exposed hotel markets is approximately 12 to 16% over a three to four quarter window. The range is wide because the outcome is not yet determined. That the range begins with a negative sign, however, is no longer in question.

1.  Performance: A Double Bankruptcy and a Fuel Shock

Spirit’s operational and financial trajectory since 2023 reflects a compound of strategic misfortune, structural cost disadvantage, and an exogenous fuel shock. The root event is the January 2024 ruling by the United States District Court for the District of Massachusetts blocking the proposed $3.8 billion acquisition by JetBlue Airways on antitrust grounds. (4) That ruling, intended to protect low-fare competition, removed the only realistic consolidation outcome for a carrier whose unit cost structure had already fallen out of alignment with its unit revenue.

By November 2024, the carrier filed its first Chapter 11 petition in the Southern District of New York, seeking a prepackaged restructuring that reduced funded debt from approximately $3.1 billion to below $1 billion, converted $795 million of notes to equity, and preserved all aircraft leases on unimpaired terms. (5) Emergence followed in March 2025 on what, at the time, appeared to be a clean balance sheet. Within six months, the carrier had filed again.

The second Chapter 11, commenced August 29, 2025 under Case No. 25-11897 in SDNY, reflected three compounding pressures that the first restructuring had not resolved: the Pratt and Whitney PW1100G geared turbofan engine crisis, which had grounded approximately 38 Spirit aircraft at petition date; continued negative contribution from the A319ceo subfleet, subsequently retired; and structural unit cost disadvantages relative to Frontier and Allegiant on overlap routes. (6) By petition date, pre-filing funded debt and lease obligations aggregated $7.4 billion, a figure inflated by capitalized aircraft lease liabilities.

The second plan, announced via Restructuring Support Agreement on March 13, 2026 and formalized in the disclosure statement filed April 6, targets a dramatically contracted enterprise: a fleet of 76 to 80 aircraft post-emergence (versus 214 at petition), approximately $2.1 billion of funded debt, and a revenue base of roughly $3.0 billion. (7) The AerCap Holdings settlement, approved October 10, 2025, crystallized the terms of the core lessor relationship: rejection of 27 existing leases (19 A320neo, 8 A321neo), retention of 10, termination of 36 future-delivery aircraft, a $150 million cash payment from AerCap to Spirit, a $572 million permitted unsecured claim against the estate, and 30 new leases to be delivered in 2027, 2028, and 2029. (8)

On October 21, 2025, the bankruptcy court approved the rejection of 67 of 87 aircraft leases, spread across sixteen lessors including SMBC Aviation Capital (21), Jackson Square Aviation (19), Aviation Capital Group (9), AerCap (27 via its separate settlement), Aircastle (4), Avolon (4), ORIX (3), ICBC Leasing (3), and single-aircraft rejections across Air Lease Corporation, DAE Capital, Vmo Aircraft Leasing, and Airborne Capital. (9) An additional 11 “cash drain” aircraft were targeted in a December 2 motion. Carlyle Aviation Partners (five A320ceo) and Fuyo General Lease (three A320neo) negotiated retention on renegotiated terms. (10)

The April 22, 2026 inflection is driven by two developments that the March RSA did not contemplate. First, the Iran war beginning February 28 drove jet fuel from $2.50 per gallon to $4.32 per gallon within seven weeks. Second, on April 20, Bloomberg reported that Spirit had floated to the Trump administration a proposal under which the federal government would acquire an equity stake in the carrier in exchange for emergency cash, modeled on the 2025 Intel Corporation precedent. (12) The Association of Value Airlines, which represents Spirit alongside Frontier, Allegiant, Breeze, and Sun Country, simultaneously petitioned Congressional leaders on April 14 for a temporary suspension of the 7.5% federal excise tax on airline tickets. (13) Both actions confirm that the disclosure statement on file is no longer an adequate description of the debtor’s path forward.

Exhibit 1: Spirit Airlines Balance Sheet and Operating Trajectory, 2023 to 2026

Metric	FY2023	FY2024	FY2025	FY2026 Plan	FY2026 Stress (JPM)
Revenue ($B)	5.36	5.07	3.80	3.02	2.85
Operating margin	−10.5%	−14.0%	−20.2%	+0.5%	−20.0%
Fleet count (aircraft)	205	213	214	76 to 80	76 to 80
Liquidity ($M)	871	464	337	900 (exit)	below 200
Funded debt ($B)	3.1	3.3	7.4 pre-pet	2.1	2.1 + DIP

Source: SEC filings, Spirit IR, J.P. Morgan April 2026 note, MMCG database estimates.

2.  The Assumption Failure

A disciplined bankruptcy plan ordinarily constructs at least three scenarios: a baseline, a downside, and a severe stress. Each is tied to explicit assumption drivers, each drives a distinct liquidity and solvency trajectory, and each is tested against observable historical volatility in the input variables. The April 6, 2026 Spirit disclosure statement presents, in the materials made public and summarized by the industry trade press, a baseline with only cursory sensitivity commentary. (14) The single variable that matters most, jet fuel, is held deterministically at $2.24 per gallon for 2026 and $2.14 per gallon for 2027.

This is the critical error. Jet fuel is the airline industry’s second-largest operating expense after labor, typically accounting for 25 to 30% of total operating costs for an ultra-low-cost carrier whose aircraft ownership structure pushes more cost into variable buckets. Between 2019 and 2025, US Gulf Coast jet fuel averaged $2.47 per gallon with a standard deviation exceeding $0.70. A reorganization plan of this magnitude, subscribed by rights offering investors and relied on by secured creditors for recovery analysis, should at minimum present the plan’s net present value under fuel bands of plus or minus 40% around the baseline. The Spirit plan does not.

The consequence became visible within sixty days. Jet fuel opened 2026 at approximately $2.45 per gallon, traded in the $2.40 to $2.60 range through February 27, and then rose sharply beginning February 28 as tanker traffic through the Strait of Hormuz contracted. By April 16 the spot price had reached $4.32 per gallon. J.P. Morgan’s Jamie Baker modeled the P&L impact under sustained $4.60 per gallon fuel in an April 2026 note: 2026 operating margin compressing from the plan’s positive 0.5% to approximately negative 20%, incremental fuel expense of roughly $360 million, and a year-end liquidity profile below $200 million against pre-petition cash of $337 million. (1)

Exhibit 2: Restructuring Plan Assumptions Versus Observed Reality and Proper Stress Bands

Variable	Plan Baseline (Apr 6, 2026)	Observed (Apr 22, 2026)	Bull Case	Bear Case
Jet fuel ($/gal, 2026 avg)	2.24	3.79 YTD; 4.32 spot	2.00	4.50
Unit revenue (cents)	11.66	~10.8 est	12.50	10.00
Load factor (%)	~82	~78	85	75
Operating margin (%)	+0.5	−15 to −20 est	+5	−25
Year-end 2026 cash ($M)	~900	~400 forecast	1,200	<50
Ch7 alt. recovery ($B)	1.43 to 1.71	unchanged	1.71	1.43

Source: Spirit Plan of Reorganization; J.P. Morgan April 2026 note; Cranky Flier April 20, 2026; MMCG database modeling.

The analytical lesson is not that Spirit failed to forecast the Iran war. No plan process can anticipate a specific geopolitical event. The lesson is that a feasibility structure designed to survive contact with reality produces a plan whose solvency remains intact across a realistic range of fuel outcomes, even if profitability compresses. The Spirit plan, by contrast, requires the central fuel assumption to hold within a narrow band to remain viable at all. Its confirmability, not merely its return profile, depends on an input variable that has historically moved by more than 40% within twelve-month windows. The April 14, 2026 US Trustee objection frames this failure in procedural terms, but the substantive implication is clear: a disclosure statement whose central premises cannot survive a seven-week window is not a disclosure statement on which creditors can make an informed decision. (3)

3.  Regional Network Concentration

Spirit’s route network is not geographically diffuse. The carrier’s capacity, measured by departing seats across the most recent four quarters of BTS T-100 data, concentrates heavily at fewer than twenty airports. At several of those airports, Spirit’s market share of total departing seats exceeds 20%, and at Atlantic City International, it exceeds 60%. (15) Any scenario that reduces Spirit’s operating fleet from 214 to 76 aircraft, which is the current base case, removes approximately 64% of that capacity from the domestic system. Any scenario that results in a full wind-down removes 100%.

Exhibit 3: Top 15 Spirit-Exposed US Airports (MMCG Database Estimates)

Rank	Airport	Market	Role in Spirit Network	Est. Spirit Share
1	ACY	Atlantic City	Primary carrier	60 to 70%
2	FLL	Fort Lauderdale	Crew base, hub	25 to 30%
3	MYR	Myrtle Beach	Leisure anchor	20 to 25%
4	SJU	San Juan	Puerto Rico gateway	12 to 15%
5	DTW	Detroit	Legacy operational base	10 to 12%
6	LAS	Las Vegas	Leisure base	9 to 11%
7	MCO	Orlando	Leisure base	8 to 10%
8	BWI	Baltimore/Washington	Leisure corridor	6 to 8%
9	DFW	Dallas-Fort Worth	ULCC presence	5 to 7%
10	TPA	Tampa	Leisure secondary	5 to 7%
11	RSW	Fort Myers	Seasonal leisure	5 to 7%
12	IAH	Houston	Secondary hub	4 to 6%
13	MIA	Miami	Crew base	3 to 5%
14	ORD	Chicago O’Hare	Leisure presence	3 to 5%
15	PHL	Philadelphia	Leisure secondary	3 to 5%

Source: MMCG database modeling based on BTS T-100 Segment 2024 Q4 through 2025 Q3 data; Spirit operational disclosures.

Four of these fifteen airports warrant particular attention. Atlantic City International is the airport at which Spirit is the dominant carrier. Removal of Spirit capacity there is not a capacity-reduction question; it is an existential question for the airport’s commercial aviation function. Fort Lauderdale-Hollywood is Spirit’s crew and operational base, and the carrier’s share of total FLL departing seats is material enough that replacement lift from Frontier, JetBlue, and Southwest is unlikely to absorb the full outbound seat count within twelve months. Myrtle Beach operates as a near-monoculture leisure-travel economy, and Spirit is the second-largest carrier at the airport. San Juan is the primary Puerto Rico gateway for mainland leisure traffic, and Spirit’s share of total SJU departing seats, while lower than FLL, anchors a specific price band (ultra-low-fare Caribbean leisure) that no other carrier currently operates at scale.

The substitution economics matter. When Wow Air liquidated in March 2019, transatlantic capacity from its base markets did not fully backfill for approximately eighteen months, and average fares on affected routes rose by 15 to 25% during the backfill period. When Aloha and ATA both shut down in early 2008, intra-Hawaii and select transpacific capacity took twelve to eighteen months to recover, and Southwest’s eventual intra-Hawaii entry did not occur until 2019. Historical precedent indicates that capacity backfill in the aftermath of a major ultra-low-cost carrier wind-down is neither immediate nor price-neutral. The operator with the balance sheet to absorb capacity (Frontier, Allegiant, Breeze) and the operator with the strategic interest to absorb it may not be the same carrier, and the gap is filled by fare increases that compress leisure demand.

4.  Hotel Market Demand Exposure

Hotel market exposure to Spirit’s capacity concentration is the single largest CRE question posed by the current Chapter 11. Spirit operates a leisure-heavy network whose demand profile is price-elastic and income-sensitive, which is the demand profile that most directly drives limited-service and select-service hotel RevPAR in leisure markets. When that demand profile contracts, the first to feel it are midscale and upper-midscale hotels, followed by upscale full-service, followed by luxury. The direction of the impact is not in question. The magnitude and duration are.

Exhibit 4: Top 10 Spirit-Exposed Hotel Markets (RevPAR Sensitivity Architecture)

Rank	Market	Airport	Spirit Demand Driver	RevPAR Sensitivity Band
1	Atlantic City CBSA	ACY	Gaming and beach leisure	−18 to −28%
2	Myrtle Beach CBSA	MYR	Beach leisure anchor	−15 to −22%
3	Fort Lauderdale CBSA	FLL	Gateway leisure, cruise feeder	−12 to −18%
4	San Juan Metro	SJU	Caribbean gateway	−10 to −15%
5	Fort Myers CBSA	RSW	Seasonal beach leisure	−8 to −12%
6	Las Vegas CBSA	LAS	Gaming and convention leisure	−5 to −8%
7	Orlando CBSA	MCO	Theme park leisure	−4 to −7%
8	Tampa CBSA	TPA	Secondary leisure	−4 to −7%
9	Baltimore CBSA	BWI	Secondary leisure	−3 to −5%
10	Detroit CBSA	DTW	Legacy operational base	−2 to −4%

Source: MMCG database hospitality modeling. Sensitivity bands reflect projected three to six month displacement under modified plan scenario (fleet contraction to 76 aircraft). Under full liquidation, bands widen by approximately 50%.

The distinction between Spirit scenarios matters for magnitude. Under a modified plan confirmation (fleet to 76 aircraft), approximately 64% of Spirit’s 2024 capacity is removed but the carrier continues to operate at its primary leisure-market airports. Under a 363 sale to a strategic buyer, operational continuity is largely preserved but schedule reliability during the transition typically deteriorates, producing a 90 to 180 day demand trough. Under Chapter 7 liquidation, capacity is removed immediately and backfill follows the twelve to eighteen month historical pattern. Under a federal equity injection, the fleet contraction is likely arrested or even partially reversed, but the political and operational uncertainty introduces bookings friction for two to three quarters even under the most favorable outcome.

The short-term rental market exposure is a parallel question. Fort Lauderdale, Myrtle Beach, Orlando, and Las Vegas short-term rental inventory has grown materially since 2021, driven substantially by leisure-ULCC demand. Operators holding multiple STR units financed via conventional commercial mortgages at interest-only or 25-year amortization face demand compression without the operational flexibility of a hotel to capture compensating rate increases. The STR channel is, at the margin, more exposed than the branded hotel channel.

Operator concentration within the top ten CBSAs further sharpens the analysis. In Fort Lauderdale, Myrtle Beach, and Atlantic City, select-service flags operated under franchise agreements by small regional ownership groups hold disproportionate exposure relative to institutional portfolios. The institutional owners of upper-upscale and luxury product have both geographic diversification and revenue-management flexibility that regional operators do not. The distributional consequence, in other words, will be more uneven within each market than the aggregate RevPAR compression number suggests.

5.  Secondary CRE Exposure

Beyond hotel exposure, four secondary CRE segments warrant attention. Workforce multifamily in Broward County, particularly Dania Beach, Hollywood, and Miramar, anchors an estimated 6,000 to 8,000 direct Spirit-employment jobs alongside 4,000 to 6,000 indirect roles tied to Spirit’s FLL capacity. (11) The MMCG database tracks Class B and Class C multifamily rent trends in Dania Beach and adjacent submarkets; the aggregate exposure is not catastrophic in absolute terms but represents a 4 to 7% demand delta to the workforce-housing segment in those specific submarkets under full liquidation, with a two to three quarter delay before vacancy data reflects the transition.

Short-term rental exposure in Fort Lauderdale, Myrtle Beach, Las Vegas, Orlando, and Atlantic City is, as noted above, more exposed to demand compression than branded hotels. The refinance market for STR-collateralized debt will likely tighten in any scenario in which Spirit contracts further, and loan-to-value marks on recent originations may move lower.

Car rental, fixed-base operator, and airport concession exposure is meaningful at Fort Lauderdale, Myrtle Beach, and Atlantic City. Concession revenue at FLL and MYR supports airport bond service and terminal operating covenants. FBO activity is less exposed (Spirit is a commercial ULCC, not a general aviation driver), but cargo and catering concession agreements at Spirit’s operational bases carry Spirit-linked minimum activity provisions that, if triggered, flow through to airport financial statements within two to three quarters.

Spirit’s Miramar headquarters, comprising an estimated 200,000 to 250,000 square feet of office occupancy across its corporate campus, is a top-fifteen-tenant occupancy in the Miramar office submarket. A full wind-down places this space back on the market within 12 to 18 months. The Miramar office submarket is not fragile in aggregate, but the specific sub-tract is concentrated enough that vacancy could rise by 300 to 500 basis points in the quarters following any wind-down event.

Spirit’s CRE footprint is wider than the hotel exposure analysis alone captures, but it is bounded. The aggregate impact, weighted across the four segments, is material at the submarket level and immaterial at the MSA level in every market other than Atlantic City, where the submarket and MSA effectively coincide.

6.  Capital Markets Read

The capital markets story has three interlocking threads: aircraft lessor behavior, the federal equity proposal, and the emerging schism within Spirit’s creditor group.

On aircraft lessor behavior, the October 21, 2025 rejection of 67 aircraft leases across sixteen lessors represents the largest coordinated lease rejection in US airline bankruptcy history by aircraft count. (9) AerCap, the largest exposed lessor, absorbed the rejection of 27 aircraft, accepted 10 retained leases, received a $150 million cash payment, secured a $572 million permitted unsecured claim, and committed to 30 new lease deliveries spread across 2027, 2028, and 2029. (8) AerCap CEO Aengus Kelly, speaking on the February 6, 2026 Q4 2025 earnings call, framed the Spirit transaction as net accretive: 103 aircraft added to AerCap’s orderbook during 2025 largely from Spirit slots, with Spirit-returned aircraft expected to re-enter service through secondary lessees “second half of 2026, with some extending into early 2027.” (16) The Irish lessor community, which includes AerCap, Avolon, SMBC Aviation Capital, Aircastle, and Airborne Capital, collectively held exposure to 67 or more Spirit aircraft at the height of the rejection process. The net recovery outlook is manageable for the lessor community in aggregate, but the pricing pressure on A320neo family lease rates in the secondary market is not trivial.

On the federal equity proposal, Bloomberg’s April 20, 2026 report that Spirit has proposed a government equity stake modeled on the Intel 2025 precedent represents a capital structure option that was not contemplated in the March 13 RSA. (12) The Intel precedent involved the federal government acquiring common equity in exchange for cash, positioning Treasury as a shareholder rather than a lender. Application to Spirit would require either standalone Congressional authorization or use of existing emergency lending authority under 49 USC 1105 and parallel Treasury provisions. The political probability is uncertain. The 2020 CARES Act airline support, which collectively disbursed over $50 billion under pandemic-emergency legislation, included warrants and repayment provisions that proved politically durable. A fuel-price-shock-driven support package for a twice-bankrupt ultra-low-cost carrier is a materially different political proposition. The Association of Value Airlines letter of April 14 explicitly frames the ask as industry-wide rather than carrier-specific, seeking suspension of the 7.5% federal excise tax on airline tickets. (13) That framing increases political optionality because it links carrier survival to broader industry policy.

On the creditor schism, court filings indicate that Spirit’s senior secured lender group, represented in part by Citibank, is actively evaluating liquidation scenarios versus continued plan support. The $275 million loan split dispute, in which Spirit has proposed dividing an existing facility into two separate tranches and Citibank has argued that the proposed split violates original contract terms and dilutes collateral protections, is a proxy for the larger question. (17) Some lenders view continued financing as throwing good capital after bad; others view the summer 2026 peak leisure-travel season as a potential inflection that could stabilize cash flow and justify continued support. The March 13 RSA was signed by a majority of secured creditors. Whether that majority holds under current fuel conditions is the open capital markets question.

The Section 1110 legal framework has governed the lessor negotiations. Under 11 USC 1110, aircraft lessors obtain a 60-day automatic stay after the bankruptcy filing, during which the debtor must either elect to perform all obligations or surrender the aircraft. Spirit’s August 29, 2025 filing triggered a 60-day window ending approximately October 28, during which the October 10 AerCap settlement, October 21 rejection order, and subsequent Carlyle and Fuyo retention terms were all negotiated. The mechanics worked as designed; the scale is what makes the Spirit case notable.

The April 6 disclosure statement’s Chapter 7 liquidation analysis pegs net recovery to unsecured creditors at $1.43 billion to $1.71 billion. (14) That range sets a floor for what plan proponents must deliver in any confirmed reorganization to satisfy the best-interests-of-creditors test. The federal equity proposal, if realized, would push the recovery envelope above that floor without requiring further creditor concessions. The modified plan path, which is what the March 13 RSA contemplates, delivers roughly the midpoint of that range.

7.  Scenario Tree

The scenario set as of April 22, 2026 contains four mutually exclusive outcomes. Each carries a distinct probability, a distinct timeline, and a distinct CRE impact profile.

Exhibit 5: Scenario Tree with Probability-Weighted CRE Impact

Scenario	Probability	Timeline	Spirit Fleet at Outcome	Primary CRE Impact
Federal equity injection	20%	Q3 2026	Preserved at 100 to 150 aircraft	Mild; two to three quarter bookings friction
Modified plan confirmation	35%	Q3 to Q4 2026	76 to 80 aircraft	Moderate; 15 to 25% RevPAR compression
363 asset sale to strategic	25%	Q3 2026	Integrated into acquirer	Moderate; 90 to 180 day transition trough
Chapter 7 liquidation	20%	Q2 to Q3 2026	Zero	Severe; 20 to 35% RevPAR compression; 12 to 18 month backfill

Source: MMCG scenario modeling; probabilities reflect current creditor positioning, fuel trajectory, and political environment as of April 22, 2026.

Under the federal equity scenario, Spirit receives a cash injection, operates through the summer leisure season, and emerges with a larger fleet than the March 13 RSA contemplates. This outcome is the most favorable for CRE exposure in Spirit-dependent markets, but it carries a two to three quarter period during which bookings recover only partially as consumers and travel managers absorb the news flow. Hotel RevPAR in the top ten exposed markets likely compresses by 4 to 8% during the transition.

Under the modified plan scenario, the March 13 RSA is confirmed with potential adjustments to account for fuel reality (further aircraft rejections, fare increases, or both). Spirit emerges at the 76 to 80 aircraft fleet target, removing approximately 64% of 2024 capacity from the system. Hotel RevPAR compression in the top ten markets sustains at 12 to 22% for three to four quarters before partial backfill by Frontier, JetBlue, Breeze, and Southwest.

Under the 363 sale scenario, a strategic acquirer (the most plausible candidates being Frontier, JetBlue, or a private-equity-backed vehicle) purchases Spirit assets out of bankruptcy. Operational continuity is preserved in the medium term but the transition typically produces a 90 to 180 day operational disruption (schedule integration, labor rebadging, booking system migration) during which capacity realizes 85 to 90% of pre-transaction levels. Hotel RevPAR compression is moderate and short-duration.

Under Chapter 7 liquidation, Spirit ceases operations. All capacity is removed. The historical playbook for major airline liquidations (Eastern 1991, Pan Am 1991, ATA 2008, Wow Air 2019) indicates full capacity backfill takes 12 to 18 months, average fares in affected markets rise 15 to 25% during the backfill period, and leisure demand declines proportionally. Hotel RevPAR compression in top ten markets reaches 20 to 35%, concentrated most heavily in Atlantic City, Myrtle Beach, and Fort Lauderdale.

Applying the probability weights to each scenario yields expected RevPAR compression across the top ten Spirit-exposed markets of approximately 12 to 16% over a three to four quarter window. That is the number the market should be pricing against.

8.  Risks to the Analysis

Five factors could materially alter the scenario set and their probability weightings.

• Fuel price normalization is the first. A ceasefire, sanctions adjustment, or OPEC production response that returns Brent crude to the $70 to $80 range within 30 to 60 days would substantially improve the Spirit base case. J.P. Morgan’s April 2026 stress run assumes sustained elevated fuel; a reversion to the plan’s $2.24 per gallon assumption would compress the liquidity gap substantially.

• Strategic M&A re-emergence is the second. Frontier Airlines has publicly explored Spirit consolidation multiple times, most recently in a February 2024 competing bid against JetBlue. A Frontier-Spirit combination in the current bankruptcy context would face different antitrust treatment than the 2024 JetBlue proposal and could credibly reduce probability-weighted CRE impact substantially. Allegiant and Sun Country are less plausible but nonzero.

• GTF grounding decline is the third. Pratt and Whitney reported in its Q4 2025 earnings that PW1100G aircraft on ground counts began declining in late 2025 and are projected to continue declining through 2026 as shop visits complete. For Spirit, which had 38 aircraft grounded at petition, the return of even half of that capacity would meaningfully improve operational economics without additional capital investment. (18)

• Political calculus on federal equity is the fourth. The current administration’s approach to strategic industry equity investment is an evolving policy question. The Intel 2025 precedent was a technology and national security investment. Airlines could be framed as consumer-protection policy (stranded passengers), labor policy (Spirit’s 13,200 employees), or aviation industrial policy. Each framing carries different political probabilities. The Association of Value Airlines letter attempts to broaden the coalition beyond Spirit specifically. (13)

• Creditor coordination is the fifth. A fracturing of the senior secured creditor group between continuation supporters and liquidation advocates would push the outcome toward Chapter 7 or 363 sale without regard to the operational merits of continuation. The Citibank dispute over the $275 million loan split is, at the moment, a localized issue but it is a proxy for the broader question of creditor unity.

The probability estimates in Section 7 reflect current information. They are, by definition, subject to revision as any of the five factors above develops.

9.  Outlook

Spirit Airlines is not yet a liquidation. As of April 22, 2026, the carrier is still operating, still servicing bookings, still employing approximately 13,200 people, and still working the bankruptcy process toward a confirmable outcome. The probability-weighted view, however, indicates that the market in which Spirit’s commercial real estate impact is priced is not the public equity market (Spirit’s old equity was cancelled in March 2025) but the hospitality debt, multifamily, and aviation-finance markets that touch the carrier’s network footprint. Those markets will reprice over the second and third quarters of 2026, regardless of which scenario eventually resolves.

Three synthesis observations close this analysis

The first is that Spirit’s April 6 disclosure statement represents an analytical artifact that the market will study for years. It is the cleanest recent example of a confirmable plan that could not survive a commonplace volatility event in its central input variable. The US Trustee’s April 14 objection is, in effect, a public declaration that the plan’s analytical architecture is insufficient. For any bankruptcy or restructuring feasibility process currently in production, the procedural takeaway is that stress bands on material input variables are not an elective formatting choice. They are the difference between a plan that survives confirmation and one that does not.

The second is that the regional CRE exposure band is real, measurable, and concentrated. The ten hotel markets identified in Exhibit 4, the multifamily submarkets in Broward County, the short-term rental concentrations in Atlantic City, Myrtle Beach, Fort Lauderdale, and Las Vegas, and the Miramar office sub-tract together define a footprint in which Spirit’s outcome will be visible in reported metrics by the end of 2026. The probability-weighted aggregate RevPAR compression of 12 to 16% across the top ten exposed markets is not a forecast of doom; it is a forecast of a measurable demand shock that institutional allocators should be accounting for.

The third is that the resolution set at Spirit is wider than the trade-press framing suggests. “Liquidation or survival” is a false binary. The four-scenario framework (federal equity, modified plan, 363 sale, Chapter 7) captures a genuinely wider range of outcomes, and the probability mass is distributed meaningfully across all four. Any institutional portfolio whose CRE exposure to Spirit-dependent demand is concentrated in the markets identified here should treat the full scenario set as the planning horizon, not only the most negative tail.

The outcome will be known by the end of the third quarter. The analysis, in the interim, should price all four branches.

April 22, 2026 by Michal Mohelsky, J.D.

MMCG Invest, LLC provides independent, third-party feasibility studies for SBA and USDA guaranteed loan programs across all commercial real estate asset classes, including multifamily, hotel, industrial, retail, self-storage, senior living, and mixed-use properties. Our studies incorporate absorption rate analysis, lease-up modeling, pre-stabilization cash flow bridging, and scenario-based stress testing to meet the analytical rigor required by leading government-guaranteed lenders, CDCs, and institutional investors. For more information, contact our team directly.

Evaluating a development or acquisition that requires defensible absorption assumptions? Reach out to discuss how our methodology supports your lending decision.

Michal Mohelsky, J.D. | Principal | mmcginvest.com 

Contact: michal@mmcginvest.com

Phone: (628) 225-1125

Disclaimer: This report is provided for informational purposes only and does not constitute investment advice. Data presented herein is derived from proprietary MMCG databases and third-party sources believed to be reliable; however, MMCG Invest makes no representation as to the accuracy or completeness of such information. Figures from third-party industry databases have been independently verified and, where appropriate, adjusted to reflect MMCG's proprietary analytical methodology. Past performance is not indicative of future results.

Reference::

(1) Fortune, “Spirit Airlines Looked Like It Was in the Clear of Reemerging from Bankruptcy, But Rising Fuel Costs Threaten Its Exit,” April 20, 2026.

(2) CNBC, “Spirit Airlines Could Liquidate as Early as This Week, Sources Say,” April 15, 2026.

(3) Law360, “Trustee’s Office Balks at Spirit Disclosure, Wants More Info,” April 14, 2026.

(4) United States District Court for the District of Massachusetts, United States v. JetBlue Airways Corp. and Spirit Airlines, Inc., Case No. 23-cv-10511, Memorandum and Order, January 16, 2024.

(5) Spirit Airlines, Inc., Form 8-K, SEC EDGAR, February 20, 2025.

(6) Spirit Airlines, Inc., Form 10-Q for Quarter Ended September 30, 2025, SEC EDGAR.

(7) Spirit Airlines Investor Relations, “Spirit Airlines Announces Restructuring Support Agreement and Plan of Reorganization,” March 13, 2026.

(8) Spirit Airlines, Inc., Form 8-K regarding AerCap transaction, SEC EDGAR, October 10, 2025.

(9) FlightGlobal, “Judge Approves Spirit Airlines to Reject Leases on 67 Airbus Jets,” October 21, 2025.

(10) Engine Cowl, “Spirit Airlines Carlyle Aviation Partners Deal” and “Spirit A320neo Lease Rejection Withdrawal,” October 2025 and January 2026.

(11) CoStar Group, Tenant Profile, Spirit Airlines, Inc., accessed April 22, 2026. Figures adjusted per MMCG database convention.

(12) Bloomberg, “Spirit Airlines Floats US Government Equity Stake in Exchange for Cash,” April 20, 2026.

(13) Association of Value Airlines, Letter to Congressional Leadership, April 14, 2026.

(14) Cranky Flier, “How is Spirit Still Flying?”, April 20, 2026, analyzing April 6, 2026 disclosure statement.

(15) US Department of Transportation, Bureau of Transportation Statistics, T-100 Segment Data, 2024 Q4 through 2025 Q3.

(16) AerCap Holdings N.V., Q4 2025 Earnings Conference Call Transcript, February 6, 2026.

(17) Local 10 News, “Spirit Airlines in Trouble: South Florida Carrier May Liquidate, Reports Say,” April 16, 2026.

(18) RTX Corporation, Q4 2025 Earnings Conference Call, January 2026.

(19) Spirit Airlines, Inc., Form 10-K for Fiscal Year 2024, SEC EDGAR, March 2025.

(20) Reuters, “Spirit Airlines Approaches Trump Administration for Emergency Aid,” April 18, 2026.

(21) FlightGlobal, “Spirit Wins New Maintenance Terms and $140M IAE Credit,” December 3, 2025.

(22) Wall Street Journal, “Spirit Airlines Faces Liquidation Risk Amid Fuel Spike,” April 15, 2026.

(23) Airfinance Journal, coverage of Section 1110 proceedings in Spirit Airlines Chapter 11, Fall 2025.

(24) Energy Information Administration, US Gulf Coast Jet Fuel Spot Prices, February through April 2026.

(25) MMCG Invest, LLC, Proprietary Hospitality and Multifamily Market Database, Q1 2026 Update.