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Spirit Airlines is preparing to cease operations after the beleaguered company ran out of cash and a rescue attempt by the Trump administration appeared to stall.
The company struggled to make a deal with its creditors and secure funding to maintain operations, according to a Wall Street Journal report citing people familiar with the matter.
After earlier reports that Spirit was close to liquidation, the Trump administration said it was working out a deal to keep the carrier afloat, including a potential $500m loan from the federal government.
Donald Trump said last week he was aware the company has been struggling and even suggested the federal government could buy out the carrier amid.
“We’re thinking about doing it, helping them out, meaning bailing them out, or buying it,” Trump said, adding that the government could “sell it for a profit” when oil prices come down.
If Spirit ends up in liquidation, it will be the first major US carrier to liquidate since the 2008 recession.
Spirit and other airlines have been struggling with high oil prices that have pushed up the price of jet fuel. The company’s woes predated the war in Iran, though, as the company has struggled to increase post-pandemic demand.
In 2024, a federal judge blocked a $3.8bn merger between JetBlue and Spirit on antitrust grounds, saying the merger would reduce competition among airlines and harm customers.
The White House, in earlier statements, said the company would “be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue”.
A group of other budget carriers, including Frontier and Avelo, reportedly pitched a $2.5bn bailout to the Trump administration last week, arguing they have been disproportionately affected by higher fuel prices.
Budget airlines offer consumers low base-level fares but typically add on hefty fees for services such as carry-on bags and seat selection.
Leaders of the “big three” US carriers, American Airlines, Delta and United, have said their companies have been affected by fuel prices, but that solid demand have made them resilient against rising prices. Last month, the CEO of Delta said demand among high-paying customers remains strong and that the company still has room to raise fare prices.
A Spirit spokesperson declined to comment on “ongoing discussion” but noted that the airline is operating as usual. The White House did not immediately respond to requests for comment.
Founded in 1983 as Charter One Airlines, Florida-headquartered Spirit operates throughout the US, Latin America and the Caribbean.
Experts warned this week that the carrier’s failure will create less competition within the consolidated airline industry and likely lead to higher prices for consumers.
