In March, Spirit Airlines came out of bankruptcy protection in less than four months and entered a worsening landscape. Consumers were holding off booking flights and U.S. planes were awash in empty seats. Even the most profitable airlines cut the rosy financial forecasts they had issued at the start of the year.

But Spirit, an airline with bright yellow planes that has become synonymous with budget travel in the U.S., now appears on even shakier ground. Last week, five months after getting out of bankruptcy, Spirit warned it might not be able to survive a year without more cash and that its credit card processor was seeking more collateral.

On Thursday, Spirit said it borrowed the entire $275 million available under its revolver. It also reached a two-year extension on its credit card processing agreement with U.S. Bank National Association to hold back up to $3 million a day.

Industry experts said the airline avoided making hard decisions before or during bankruptcy protection, such as renegotiating aircraft leases or shrinking the carrier altogether. Instead, the airline in bankruptcy reached a deal with bondholders, who exchanged debt for equity.

“It made it that much more unlikely for them to succeed without having tackled some of those issues,” said Joe Rohlena, airline analyst at Fitch Ratings, which downgraded Spirit last Friday, saying the company might be unable to avoid a default because of its cash burn.

Bankruptcy attorney Brett Miller, U.S. co-chair of the restructuring department at Willkie Farr & Gallagher who represented the creditors’ committee, said Spirit “didn’t use the tools available to them in Chapter 11” for bigger changes.

Spirit had forecast a net profit of $252 million this year, according to a court filing from December. But its report last week said it instead lost nearly $257 million since March 13, after it exited Chapter 11 through the end of June.

Shares of Spirit Aviation Holdings have dropped close to 58% since its “going concern” warning earlier this month. The stock of other airlines rallied after the cautionary statement. About 10% of Spirit’s seats are on routes with no competition, according to Courtney Miller of Visual Approach Analytics, an aviation research firm.

Signs of strain are showing. Aircraft lessors have reached out to competitor airline executives in recent weeks asking if they would take any of Spirit’s roughly 200 Airbus aircraft, according to people familiar with the matter.

Aviation analytics firm IBA’s chief economist, Stuart Hatcher, said he would have expected Spirit to be more proactive on dealing with aircraft leases during bankruptcy.

“If they’re able to strip 10% of all of their lease rates, that would have had a huge impact on cash flow,” he said.

This doesn’t mean the end of the line for Spirit.

“There’s a lot of incentive to keep airlines alive because there’s a lot of constituencies that would be hurt badly” like employees, consumers and others, said James Sprayregen, vice chairman of financial services company Hilco Global who represented United Airlines and TWA airlines in their respective bankruptcies.

More recently, the carrier has said it is seeking to sell assets like planes, leases and real estate to raise cash. It has also reduced some of its unprofitable flying and last year had announced job cuts and aircraft sales last year to cut costs and raise cash. 

Spirit CEO Dave Davis told employees in a memo last week that the changes the Dania Beach, Florida-based company is making “will continue to provide consumers the unmatched value that they have come to expect for many years to come.”

Spirit declined to comment on whether it would file for bankruptcy again or whether lessors are trying to remarket its planes.

“We will not comment on market rumors and speculation,” Spirit said in an emailed statement. “Spirit Airlines is a critical part of the U.S. aviation industry, and we provide high-value travel options to the communities we serve. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. Our focus is on making the necessary changes to better position the company and build a stronger airline. We remain hard at work on many initiatives to protect our business, valued Team Members, partners and Guests.”

IBA’s Hatcher said it’s getting to be the wrong time of year — the low season, after the peak summer and before the winter holidays — to place aircraft with other airlines, though pricing has been firm. It’s been even stronger for spare Pratt & Whitney engines. The engines for Airbus A321neos that Spirit uses are renting for $15.8 million a month, up about 50% from 2019, according to IBA data.

But some warn that even deep cuts can’t always turn an airline around.

“You have no place to sleep if you burn your bed,” said Brett Snyder, founder of the Cranky Flier travel website, author of a weekly airline industry network analysis and a former airline manager.

Meanwhile, the carrier already plans to furlough hundreds of more pilots, and both aviators’ and flight attendant unions are bracing employees for worse news ahead.

“Spirit is in a fragile financial position, likely more so than at any point in the previous 24 months,” the Association of Flight Attendants-CWA, which represents Spirit’s roughly 5,400 cabin crew members, said in a note to the members on Aug. 12, after Spirit’s warning. “Use this time to assess your financial situation and begin strategizing how best to weather the financial impact that flying cutbacks may have on your household.”

Hundreds of its flight attendants have already taken temporary leaves of absence, which allowed them to keep medical benefits.

A Pratt & Whitney engine recall grounded many of its aircraft starting in 2023. That same year it reached a deal to merge with fellow budget carrier Frontier Airlines, but shareholders rejected the deal in favor of an all-cash takeover by JetBlue Airways that was ultimately shot down in a federal antitrust case, leaving both carriers on their own.

Frontier was in merger discussions with Spirit last year just before Spirit’s bankruptcy filing, but those talks fell apart.

“They’ve squandered every opportunity to make everything work,” Snyder said.

An oversupply of domestic flights also drove down airfare in recent years, prompting the industry to cut back capacity, and the trend was especially punishing for U.S.-focused carriers. Those low-fare carriers had another problem when wages went up in the wake of the pandemic, upending their low-cost model.

“I think there may have been a bit of optimism on their part in terms of kind of the strategic reset that they had planned,” said Fitch’s Rohlena. “That then came face-to-face with a harder, harsher aviation environment.”