Spirit Airlines is gearing up to shrink to a tiny version of its former self in an attempt to survive, according to a new plan it unveiled in U.S. Bankruptcy Court on Tuesday.

The budget-travel icon said it will get rid of even more of its Airbus fleet as it plans to exit its second bankruptcy in less than a year. It expects to emerge in late spring or early summer, Spirit’s lawyer, Marshall Huebner of Davis Polk, said at a hearing.

The airline has reached an agreement in principle with its creditors for the plan, Huebner said, adding that secured lenders will make “material incremental liquidity available to Spirit via the release of cash collateral.”

In its second bankruptcy, Spirit had held deal talks with Frontier Airlines, and with investment firm Castlelake. Nothing materialized, but Huebner hinted a combination could be back on the table.

“This emergence will allow Spirit to do many things from a position of strength and stability, including to consider potential future industry transactions,” Huebner said.

Spirit’s new fleet would be made up of mostly older Airbus planes, “with the potential rejection of additional high cost NEO aircraft,” Huebner said, referring to the more modern Airbus A320 family of planes, adding that the exact size of Spirit’s fleet will depend on talks with counterparts like aircraft lessors.

He said Spirit’s annualized fleet cost would be cut another $550 million, down 65% from before its bankruptcy filing last year. The debtors have also eyed another $300 million in cost savings from non-fleet cuts, he said.

Spirit has already reduced some of its Airbus fleet and furloughed pilots and flight attendants to cut costs as it reduced its network, though some cabin crew members were called back to work ahead of spring break.

“Because every single day counts, and every single dollar counts, the airline industry is just as competitive today with this deal in hand as it was last Friday, and we must — and will — lock down what we need from other stakeholders and then begin a high speed march to get this storied company out of Chapter 11 at the earliest possible date so that it can write its next chapters from a position of strength,” Huebner said. 

Spirit’s new plan will be challenging. It would pit a smaller version of Spirit against ever-larger competitors that dominate the U.S. market. Some U.S. budget carriers have struggled due to a surge in labor and other costs post-Covid, a growing consumer shift in favor of more upscale travel and increased competition from larger airlines that offer stripped down fares.

Spirit was uniquely challenged by a massive engine recall from Pratt & Whitney and a failed plan to get acquired by JetBlue Airways, a deal knocked down by a federal judge in early 2024.

Spirit forecast it would generate a net profit of $252 million last year, according to a court filing in December 2024. But it said in an August report that it lost nearly $257 million in a matter of months stretching from March 13, after it exited its first Chapter 11 bankruptcy, through the end of June. It filed for Chapter 11 bankruptcy protection again less than a month later.