Spirit Airlines planes at Fort Lauderdale-Hollywood International Airport in Florida on Thursday.Marco Bello/Reuters
A lawyer for Spirit Airlines said Thursday that the bankrupt budget carrier was in advanced talks with the U.S. government on a financing deal that would help it emerge from Chapter 11 protection instead of having to shut down.
Details of the potential deal have been shared with all three of the company’s primary creditor groups, Marshall Huebner, a lawyer with Davis Polk, said during a U.S. Bankruptcy Court hearing in New York.
Spirit has struggled with losses for years. The airline filed for bankruptcy in November, 2024, and again in August, 2005. Government financing would make the airline’s latest reorganization possible and help Spirit be more competitive, Mr. Huebner said.
With the Iran war driving up jet fuel costs for all airlines, creditors earlier this month expressed doubts about Spirit’s continuing viability, raising the possibility the airline recognized for its bright yellow planes would be forced to sell its assets and cease operating.
Trump administration nearing $500-million deal to rescue Spirit Airlines
U.S. President Donald Trump stoked speculation of a lifeline on Tuesday when he encouraged a buyer to rescue the struggling airline and suggested the federal government could help Spirit afloat.
Asked about possible government relief, Transportation Secretary Sean Duffy told reporters the same day that Mr. Trump had directed the Department of Transportation to review possible options.
The size and terms of the financial aid under discussion have not been shared publicly. The Wall Street Journal and Bloomberg both reported US$500-million as the amount and said the government would reserve the option to acquire a sizable stake in the airline.
The White House on Wednesday attempted to blame Spirit’s predicament on the Biden administration, which in 2023 sued to stop JetBlue Airways from buying Spirit for US$3.8-million. A little more than a year before Mr. Trump replaced Joe Biden as president, a federal judge in Dallas blocked a proposed Spirit-JetBlue merger, saying it would drive up airfares for passengers.
But some lawmakers and even Mr. Duffy have voiced skepticism about the government stepping in to keep Spirit alive. In a CBS interview that aired Tuesday night, the Transportation Secretary questioned whether a financing deal would set a broader precedent.
“Then who else comes to my door?” Mr. Duffy said, referring to other airlines potentially requesting government aid. “The question will be, can we do anything to save Spirit and make it viable, or would we be putting good money into a company that inevitably is going to be liquidated?”
Several lawmakers, both Republican and Democrats, have balked at the idea of a bailout. Senator Ted Cruz of Texas wrote on X on Wednesday that a deal for Spirit would be a “terrible idea.”