A top economic adviser to President Donald Trump said Thursday that talks with creditors aimed at a government bailout for struggling Spirit Airlines are continuing with the U.S. Department of Commerce.
“Those are ongoing negotiations with the Commerce Department and the creditors,” National Economic Council Director Kevin Hassett told reporters in Washington, according to a report by Bloomberg.
Asked how long Spirit can stay aloft, he replied: “It depends. The creditors can give them more time by helping them out, if they want to hold this [airline] up.”
He did not specify in what form creditors could help.
Trump last week publicly triggered the idea of the government assisting the airline, which has been operating under Chapter 11 bankruptcy protection since August of last year. Although Spirit has announced its intention to exit Chapter 11 by this summer, a proposed reorganization plan was sidelined after the outbreak of war between the U.S., Israel and Iran, and the subsequent doubling of jet fuel prices that swept the commercial airline industry.
Reportedly, the Trump administration has been discussing a deal that would include a loan of as much as $500 million in exchange for warrants to purchase up to about 90% of the airline.
But some investors who have lent the airline sizable amounts of money have reportedly balked at the idea. They are concerned that their position as creditors might be subsumed by the government if it moved forward with a loan to Spirit.
The Miami-based financial firm Citadel is reported to be among the group of concerned creditors who offered a counterproposal. It has not been made public. Late Wednesday, a Citadel spokesman declined comment.
Marshall Huebner, the lead bankruptcy attorney for Spirit, notified the U.S. Bankruptcy Court in New York that an anticipated hearing Thursday on a proposed government rescue package would not take place.
In a notice filed with the court Wednesday, Huebner recounted how his clients, Spirit Aviation Holdings and several subsidiaries including the airline were “in advanced discussions with the United States Government regarding the terms of a potential financing package.”
Huebner also noted that legal representatives of the unsecured creditors committee and various lenders had been provided with proposed terms of the government offer. But he did not outline them.
Spirit, meanwhile, continues to operate at South Florida’s three international airports, at cities across Florida and elsewhere in the U.S., and at various foreign destinations in Latin American and the Caribbean.