The settlement between Spirit Airlines and AerCap, approved by the U.S. Bankruptcy Court for the Southern District of New York on October 10, 2025, gave Spirit a $150 million cash payment and a smaller fleet in exchange for rejecting most of its leases with the Dublin-based lessor, canceling its outstanding Airbus order in AerCap’s favor, and granting AerCap an allowed unsecured claim of roughly $572 million. It was the centerpiece of Spirit’s second Chapter 11 case, and it did not save the airline: Spirit wound down all operations on May 2, 2026.
Why AerCap Moved Against Spirit
AerCap was Spirit’s largest aircraft lessor, with 37 jets on lease to the carrier and a 2024 sale-leaseback transaction covering 36 Airbus A320neo-family aircraft scheduled for delivery in 2027 and 2028.
On August 25, 2025, AerCap sent Spirit two notices. The first terminated the leases on all 36 undelivered aircraft and triggered termination fees of $2.1 million per aircraft. The second declared defaults on the 37 existing lease agreements. Both cited a lease provision that treated bankruptcy-related proceedings or filings as an event of default, along with a cross-default clause tying the undelivered aircraft to the existing fleet.
Spirit disputed the notices. CFO Fred Cromer called them “extraordinary” and said they were issued “without supporting evidence,” and the airline maintained it was current on all lease payments. Whatever the merits, the disclosure was destabilizing. Spirit revealed the notices on August 29, 2025, and filed its second Chapter 11 petition the same day, telling the court it feared other counterparties would follow AerCap’s lead. The case landed with Judge Sean H. Lane as case number 25-11897.
What the Settlement Contained
Spirit and AerCap announced the deal on September 30, 2025. Judge Lane approved it on October 10, alongside a separate $475 million debtor-in-possession financing facility from Spirit’s existing bondholders. The settlement resolved every outstanding claim and dispute between the two companies.
Cash Payment and Unsecured Claim
AerCap agreed to pay Spirit $150 million in cash. In exchange, the court allowed AerCap to file a general unsecured claim against Spirit for approximately $572 million. The eventual recovery on that claim depended on how much unsecured creditors would collect from the broader estate, which was not fixed at approval.
Lease Rejections and Forfeited Deposits
Spirit rejected 27 of the 37 existing AerCap leases. Nineteen of the rejected aircraft were A320neos, the variant most affected by the Pratt & Whitney GTF engine recall that had grounded a large portion of Spirit’s fleet. Spirit also forfeited $9.7 million in cash security deposits tied to the rejected leases and gave up any claim to the 36 undelivered jets that AerCap had already terminated in August.
Transfer of the Airbus Order
Spirit canceled its outstanding purchase commitment for 52 Airbus aircraft, along with options for 10 more. AerCap took over those orders. That ended Spirit’s direct buyer relationship with Airbus and moved a substantial pipeline of new narrowbody jets to a lessor positioned to place them with other carriers.
New Leases for Future Delivery
The settlement also included new business. Spirit signed fresh lease agreements with AerCap for 30 Airbus A320 or A321 aircraft, with deliveries split equally across 2027, 2028, and 2029. The new aircraft were meant to support Spirit’s planned return to growth once it emerged from bankruptcy with a smaller fleet.
How Other Lessors Were Treated
AerCap was the only lessor to reach a comprehensive settlement with Spirit. The airline later moved to reject 87 additional aircraft from other lessors, a process one industry source described as affecting “basically everyone but AerCap.” The largest exposures on the rejection list belonged to SMBC Aviation Capital with 21 aircraft, Jackson Square Aviation with 19, and Aviation Capital Group with 9, along with smaller counts at Aircastle, Avolon, ICBC Leasing, and others. These lessors did not receive cash payments or new fleet commitments; they had to recover their aircraft through the bankruptcy process, and many of those aircraft carried the same problematic GTF engines that had driven Spirit to shed capacity in the first place.
Why Spirit Needed the Deal
Spirit had emerged from its first Chapter 11 on March 12, 2025, after a narrow financial restructuring in which aircraft lease obligations had been left unimpaired. The turnaround did not hold. Between mid-March and the end of June 2025, Spirit lost nearly $257 million against a projected full-year net profit of $252 million. Weak domestic demand, high fuel prices, an oversupply of U.S. flights, and continued GTF engine groundings all cut into results. By late August the airline had drawn down its entire $275 million revolving credit line and was facing potential daily holdbacks of up to $3 million from its credit card processor.
By late 2024, roughly 40 A320neo jets — nearly 20% of Spirit’s fleet — were grounded because of the Pratt & Whitney recall, and the airline expected groundings to continue through at least 2026. Cromer later said the AerCap settlement was necessary to “optimize the fleet count” and shed the maintenance and return costs tied to the troubled neo aircraft.
What Happened After Approval
The settlement and the $475 million DIP facility were designed to stabilize Spirit while it restructured. The airline planned to shrink its fleet from 214 aircraft to between 76 and 80 by the third quarter of 2026. In February 2026, the court approved the sale of 20 owned A320ceo and A321ceo jets to CSDS Asset Management for roughly $553.5 million. On March 13, 2026, Spirit filed a new restructuring support agreement aiming to cut total debt and lease obligations from about $7.4 billion to roughly $2 billion, with emergence targeted for early summer 2026.
That plan collapsed. On May 2, 2026, Spirit announced an immediate, orderly wind-down of all operations. CEO Dave Davis pointed to a sudden and sustained rise in fuel prices linked to the war with Iran, along with the airline’s inability to raise the additional liquidity it needed to keep flying. A $500 million federal rescue package had been under discussion but fell apart over what Transportation Secretary Sean Duffy called “a creditor issue.” Judge Lane approved Spirit’s wind-down motions on May 5, 2026. Leased aircraft began reverting to their lessors, and the 30 new AerCap jets scheduled for delivery beginning in 2027 became moot with the airline’s closure.