Musings of an Aviation Investor:
Profitability and Over-ordering — December 2025

The key summer period for Northern hemisphere airlines was muted and financial performance mixed. Domestic US, the largest global sub-market, remained weak as capacity levels remained excessive despite some earlier signals of restraint.

This led to the second bankruptcy filing of ULCC Spirit Airlines after what can only be considered a bungled Chapter 11 restructuring in late 2024/early 2025 when it singly failed to deal with excess capacity and labour costs. So, although there was modest domestic ASM control over the summer (Southwest flat and Frontier -4%), after earlier capacity additions this was insufficient to restore profitable flying. The LCCs’ margins were even worse than the poor 2024, with Spirit at minus -25% (adjusted to remove a $114m gain in the disposal of assets) and Frontier at -16% (adjusted to remove sale and leaseback profits).