American Airlines vs. Spirit Airlines: What Recent Moves and Financial Struggles Mean for Investors

As 2025 winds down, two major U.S. airlines — American Airlines and Spirit Airlines — are at a crossroads. American, one of the nation's oldest carriers, is facing pressure from shrinking market share and rising costs. Meanwhile, Spirit, the budget airline known for its ultra-low fares, has filed for bankruptcy for the second time this year. What do these developments mean for American's future, and how might they affect the broader airline industry? With the sector on the brink of a potential 2026 recovery, now is a good time to break it down.

The Competitive Landscape: Delta, United, and the shrinking middle

The U.S. airline industry has long been dominated by four major players: American, United, Delta, and Southwest. But in recent months, industry observers have started to question how long that balance will hold. At the heart of this shift is United CEO Scott Kirby, who recently declared that only two airlines — Delta and United — will remain as large, full-service carriers in the long run. Kirby's comments suggest that the market is consolidating, and that American and its peers are at risk of shrinking as costs rise and customer preferences shift.

American, for its part, is struggling with a combination of high fixed costs and a shrinking route network. Meanwhile, Spirit's low-cost model — which once made it a disruptor in the budget travel space — is under pressure from rising fuel and labor costs. These challenges highlight a broader industry problem: traditional cost structures are no longer working as well as they once did.

Spirit's Bankruptcy and American's Strategic Response

Spirit's recent financial collapse has sent ripples through the industry. The airline filed for bankruptcy again in late 2025, and American is watching the situation closely. In fact, American has requested to be included in Spirit's bankruptcy negotiations — a move that suggests the company might be eyeing potential asset acquisitions. Analysts are speculating that American could purchase some of Spirit's routes, aircraft, or other key assets to bolster its own network without the high costs of building from scratch.

This isn't just about cost savings — it's also about strategic positioning.

If American can acquire some of Spirit's underpriced assets, it could help it expand its low-cost offerings or improve efficiency in key markets. That would give it a better chance of competing against the more financially stable Delta and United.

What This Means for the Industry and Investors

For investors, the key takeaway is that the airline sector is shifting. The companies that can adapt — whether through strategic acquisitions, route optimization, or new product offerings — are more likely to succeed. American is taking a proactive approach by seeking to acquire Spirit assets and investing in new premium offerings like Flagship Suites and long-haul Airbus A321XLR routes.

But the broader picture is one of consolidation. United and Delta are outperforming their peers, earning a combined $6.1 billion from January to September 2025, while American and Spirit collectively lost $650 million during the same period. This divergence in performance is raising concerns about the sustainability of the traditional four-airline model.

Still, there are signs that the industry could be on the path to recovery. Analysts like Citigroup's John Godyn are bullish on the sector, predicting a potential rebound in 2026 driven by improved supply chains, more stable labor markets, and better fuel prices.

Looking Ahead: The 2026 Outlook and Recovery Potential

While 2025 has been tough, there are reasons to be cautiously optimistic. Airlines are starting to see the benefits of better aircraft utilization, improved crew scheduling, and more predictable demand. American, in particular, is positioning itself to take advantage of these trends by expanding its premium offerings and investing in more efficient aircraft.

For now, investors should keep an eye on American's ability to acquire strategic assets from Spirit, as well as its progress in reducing costs and improving operational efficiency. If it can do that while maintaining a strong brand and customer experience, it could emerge from this period of turbulence in a stronger position.

One thing is clear: the airline industry is in transition. Whether American can keep up with the pace of change — or get left behind — will depend on how well it can adapt to the new realities of the post-pandemic world.