Spirit Airlines Wind-Down Plan Calls for Millions in Bonus Pay

Spirit Airlines’ pivot from reorganizing to winding down in bankruptcy is going to require millions of dollars in retention payments to non-management employees and a revised bonus plan for three senior executives.

The budget airline, which shut down over the weekend following failed talks for a federal government rescue, on Monday rolled out a contingency plan to maintain a skeleton crew of “key officers and employees” to liquidate its aircraft and other assets on an expedited basis.

Spirit has faced high attrition rates since filing for bankruptcy last year due to “the uncertainty surrounding their businesses” and keeping key employees in place through the liquidation process will become even more difficult, the company told the US Bankruptcy Court for the Southern District of New York.

To ensure an orderly conclusion of the Chapter 11 case, Spirit requested approval to pay up to $10.7 million in total retention payments to 130 non-management employees. The retention plan contemplates a gradual reduction in force over the remainder of the year, with just 10 non-officers needed for more than six months once various operational, regulatory and financial tasks have been completed.

The company also sought to implement a separate bonus plan designed to “motivate and encourage” CEO Dave Davis and two other senior officers to “expeditiously and cost-effectively implement the wind-down.”

Certain details of the senior executive compensation package are still under discussion with company lenders, which will feature a one-time payment tied to asset liquidation and keeping costs below the wind-down budget.

Liquidation plan bonuses would replace any payments that Spirit would have historically offered the CEO, senior vice president, and general counsel under their annual incentive plans, and will require that the senior officers sign mutual releases of claims against the company and creditors, according to the filings.

The proposed employee bonus programs and additional relief to implement Spirit’s controlled liquidation is scheduled for a court hearing Tuesday.

Spirit is represented by Davis Polk & Wardwell LLP.

The case is In re Spirit Aviation Holdings Inc., Bankr. S.D.N.Y., No. 25-11897, motion filed 5/4/26.