Spirit Airlines Faces Financial Crisis Amid Stalled Bailout Talks
Spirit Airlines is on the brink of collapse with limited cash reserves, as negotiations for a government-backed rescue have stalled.
Spirit Airlines is confronting a severe financial crisis, with available cash reserves sufficient to sustain operations for only a few days. Negotiations for a government-backed bailout have reached an impasse, according to sources familiar with the discussions.
The airline has experienced two bankruptcies since 2024 and is grappling with escalating fuel costs due to the ongoing conflict in Iran. In response, Spirit sought a $500 million loan from the federal government, proposing that the government acquire a 90% stake in the company. This arrangement would position the government as the senior bondholder, ensuring repayment priority over other creditors. However, this proposal requires creditor approval, which has not been forthcoming.
Notably, Citadel, led by Ken Griffin, presented a counterproposal that was subsequently rejected by the government. Additionally, Ares Management Corp. and Cyrus Capital have expressed opposition to the government's plan, as reported by two U.S. officials.
A bankruptcy hearing scheduled for Thursday was postponed, indicating that discussions regarding the bailout package are ongoing. Last week, it was disclosed in a bankruptcy court hearing that Spirit missed an interest payment, potentially placing the airline in default on its debtor-in-possession agreement. While creditors have not yet issued a default notice, they hold a lien on Spirit's $250 million in cash reserves.
President Trump has expressed openness to a government takeover of Spirit Airlines "for the right price," emphasizing the potential to preserve thousands of jobs and highlighting the airline's valuable assets. He stated, "They have some good aircraft and good assets, and when the prices of oil goes down, we'll sell it for a profit." The administration is considering invoking the Defense Production Act to extend a loan to Spirit, potentially utilizing the airline's capacity for military operations and planning to sell the company upon its emergence from bankruptcy.
Representatives for the Trump administration and Spirit Airlines have not immediately responded to requests for comment regarding the ongoing negotiations.