The collapse of Spirit Airlines may signal wider stress across low-cost carriers (LCCs), according to a report from aviation data platform IBA Insight.

Data from IBA’s Insight aviation intelligence platform found that in 2025, the airline reported a US$2.8 billion net loss, an EBIT margin of -23.6%. At the same time, it also saw a widening Revenue per Available Seat Kilometre (RASK) and Cost per Available Seat Kilometre (CASK) gap of -1.4 cents per ASK, highlighting structurally negative unit economics prior to its collapse.

IBA analysis of the airline’s unit revenue and cost performance indicates that Spirit lost its cost advantage relative to competitors in 2025, prior to the recent fuel price increases. The chart above demonstrates that, compared to other US low-cost carriers (including Southwest Airlines, JetBlue Airways, Frontier Airlines and Sun Country Airlines) Spirit’s cost base had moved closer to, and in the case of Frontier Airlines, exceeded its competitors, eroding the fundamental ULCC cost differential.

The assessment indicates that, by the time Spirit Airlines ceased operations on 2 May, it operated a fleet of 179 Airbus narrowbody aircraft with an average age of seven years. Approximately 83% of the fleet was leased.

READ: Spirit Airlines collapses as costs spiral

The report highlights that, while fuel acted as the final trigger, it was not the underlying cause of the airline’s collapse. Spirit’s financial position had already weakened significantly, with negative operating cash flow of US$930 million and a structurally negative unit margin, leaving little capacity to absorb further increases in operating costs.

The strategic challenge for Spirit was that its ULCC model did not operate within a protected niche. The airline competed directly with US legacy carriers across much of its network, with only around 6% of capacity on exclusive routes, exposing it to sustained pricing pressure from airlines with stronger distribution, loyalty programmes and schedule depth.

READ: Report finds Spirit Airlines has ‘;significant structural and financial weaknesses’

IBA notes that the broader implication is that Spirit may not be an isolated case. Airlines with high lease exposure, limited fuel hedging, weak liquidity and sustained negative unit economics are increasingly vulnerable in the current operating environment, particularly if fuel prices remain elevated or further external shocks emerge.

Dan Taylor, Head of Consulting at IBA, said: “Spirit Airlines’ collapse reflects a structural breakdown in its cost model rather than a single external shock. Airlines with lease-heavy fleets and limited pricing power are particularly exposed when cost pressures rise, especially if the underlying unit economics have already deteriorated. In this environment, the combination of negative margins and limited financial flexibility can quickly become unsustainable.”