Another low-cost airline files for bankruptcy
More than one budget airline has ended up in insolvency due to the prolonged jet fuel price highs amid the closure of the Strait of Iran and instability in the Middle East set off by the U.S.-Israeli strike on Iran in February 2026.
Spirit Airlines was the biggest name to, after years of poor balance sheets and earlier attempts to restructure, be dealt the final blow by jet fuel prices and permanently shut down all operations in May 2026.
Mexican budget airline Magnicharters and Latvian flag carrier AirBaltic are among the other airline names to file for bankruptcy bankruptcy protection in recent months. In the latter case, flights are continuing uninterrupted as the national carrier seeks to restructure its debt and reduce its fleet of 50 Airbus A220-300 planes.
Volotea enters preliminary bankruptcy protection, looks to restructure debts
Over in Spain, Barcelona-based budget airline Volotea was established in 2011 at the height of the low-cost airline model bonanza in Europe.
Amid an explosion of new airline launches, the model of luring customers with a low base fare and then making up for it with ancillary charges gradually became less and less lucrative over the subsequent decade as operating costs rose and mainstream airlines started playing the same game with basic economy.
Related: Airline grounded, cancels all flights after bankruptcy
As first reported by local Spanish press, Volotea has filed for preliminary creditor protection at the Commercial Court of Barcelona on Sept. 29.
While Spanish law differentiates between the preliminary move and a full bankruptcy, this is the first step in seeking insolvency protection from creditors. It is the closest equivalent to a Chapter 11 filing in the U.S. in that it allows the airline to restructure its debts and reach an agreement with creditors independently before having to go through a court-assigned administrator. Volotea hopes to complete this process by December 2026.
Volotea CEO Carlos Muñoz named jet fuel prices as the primary reason for having to seek creditor protection in order to ensure the “long-term continuity” of the airline. As part of the restructuring, Volotea is planning to shrink its fleet of 44 leased Airbus A319 and A320 jets to approximately 30 and seek a capital increase from shareholders like the Greek airline Aegean and U.S.-based hedge fund PAR Capital.
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What is happening with Volotea flights in 2026
Flights to the more than 110 destinations across Europe and North Africa to which Volotea flies are currently not expected to be affected as the carrier goes through insolvency proceedings.
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These other airlines filed for bankruptcy or shut down in 2026:
- Flamingo Air and Aerodiana: The regional airlines with large client bases among tourists to the Bahamas and Peru, respectively, currently have suspended AOCs after fatal accidents in their home countries in July 2026.
- Spirit Airlines: The largest airline shutdown of the year occurred when Spirit Airlines canceled all remaining flights on May 2. Although the airline had filed for Chapter 11 protection twice before, the skyrocketing price of jet fuel dealt the final blow.
- Magnicharters: The Mexican low-cost airline ended up canceling all flights and filing for bankruptcy in a shutdown that left thousands stranded.
- Starflite Aviation: Houston-based Starflite Aviation had its AOC license revoked in March 2026, amid FAA claims that owners falsified pilot training records to bypass safety audits.
- AlpAvia: Slovenian charter airline AlpAvia also shut down in March 2026 due to financial problems.
Related: Another national airline files for Chapter 11 bankruptcy