Spirit Airlines is in advanced talks to secure a loan of as much as $500 million from the Trump administration as part of last-minute efforts to avoid shutting down, two people familiar with the situation said Tuesday.<\/p>\n
The move would be the latest in a series of government interventions in the private sector that President Trump has made in his second term. It could help prevent, or delay, the loss of thousands of jobs, but it would also raise questions about whether the government was spending money wisely. Spirit Airlines has been struggling for years and is in its second bankruptcy in two years.<\/p>\n
The government\u2019s loan would have a more senior claim to Spirit\u2019s assets than loans the airline has taken from other creditors, the people said. The government would also receive the right to purchase a significant ownership stake in Spirit through financial instruments known as warrants, the people said on the condition of anonymity to discuss an ongoing deal. The government\u2019s stake in Spirit could ultimately climb to 90 percent, one of the people said.<\/p>\n
The goal of the agreement is to give Spirit enough money to establish a sustainable business plan, the people said.<\/p>\n
Mr. Trump previewed the rescue on Tuesday, saying in an interview on CNBC that \u201cmaybe the federal government should help\u201d the company. He also said he would \u201clove somebody to buy Spirit.\u201d<\/p>\n
The airline declined to comment on Wednesday on the possibility of receiving federal aid. \u201cWe are operating our business as normal,\u201d Spirit said in a statement. \u201cGuests can continue to book, travel and use tickets, credits and loyalty points as usual.\u201d<\/p>\n
In response to questions about the talks, a White House spokesman, Kush Desai, attributed Spirit\u2019s problems to the Biden administration\u2019s decision to file a lawsuit to block the airline\u2019s merger with JetBlue Airways<\/a>.<\/p>\n \u201cThe Trump administration continues to monitor the situation and overall health of the U.S. aviation industry that millions of Americans rely on every day for essential travel and their livelihoods,\u201d he said.<\/p>\n In a statement, the Association of Flight Attendants-CWA union, which represents thousands of flight attendants at Spirit, expressed support for federal intervention. \u201cWe are hopeful that the government will recognize the needs for emergency funds especially in the current economic environment,\u201d the union said.<\/p>\n The Wall Street Journal earlier reported on Spirit\u2019s talks with the government<\/a>.<\/p>\n Spirit\u2019s prospects have been growing bleaker for years. Starting in the 2000s, the budget airline helped reshape American aviation by selling cheap tickets and charging fees for printed boarding passes and seat selection, among other perks. But it last made money in 2019 and has since lost billions of dollars.<\/p>\n Spirit had hoped to resolve its current bankruptcy case this year while continuing to operate, but the recent rise in fuel prices caused by the war with Iran has threatened that plan.<\/p>\n The airline had struggled to recover from the Covid-19 pandemic amid intense competition. Spirit also wrestled with rising costs, the failed attempt to sell itself to JetBlue and engine defects that grounded many planes in its fleet for long stretches.<\/p>\n Over the past couple of years, Spirit\u2019s business has shrunk drastically. It flew about 15,000 flights in March, down from about 29,000 in the same month two years earlier, according to Cirium, an aviation data firm. In a March securities filing, Spirit said it employed about 9,700 people last year, down from 11,900 the year before.<\/p>\n Senator Ted Cruz, Republican of Texas and the chairman of a committee that oversees the airline industry, called the effort to rescue Spirit \u201can absolutely TERRIBLE idea<\/a>\u201d on social media.<\/p>\n And Senator Elizabeth Warren, Democrat of Massachusetts, blamed Mr. Trump\u2019s decision to attack Iran for causing \u201cthe sky-high fuel prices that finally did Spirit Airlines in<\/a>.\u201d<\/p>\n Even so, some industry experts say government assistance for Spirit would be good for travelers because the airline\u2019s low fares force other carriers to offer better deals. A federal judge cited that dynamic in 2024 as a central reason in ruling that JetBlue should not be allowed to acquire Spirit<\/a>.<\/p>\n The transportation secretary, Sean Duffy, this week highlighted some of the challenges Spirit faced and discussed whether federal aid would be enough to put the company on a sustainable financial path.<\/p>\n \u201cThe 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?\u201d Mr. Duffy said in an interview with CBS that aired on Tuesday.<\/p>\n If Spirit reaches a deal with the U.S. government, it could encourage other struggling airlines to ask for help, as well. Several budget airlines recently asked Congress for relief from certain taxes.<\/p>\n Aviation experts have said few airlines would want to buy Spirit because it had already shed some of its most valuable assets. Buying and adapting what remains of the company could be cumbersome and may not provide a sufficient financial return. Still, federal backing of Spirit may encourage some airlines to take another look.<\/p>\n On Wednesday, the chief executive of United Airlines, Scott Kirby, expressed skepticism about the need for federal intervention and said Spirit was operating on a \u201cfundamentally flawed\u201d business model.<\/p>\n \u201cThe U.S. airline industry is on the most solid footing coming into this fuel price spike than we\u2019ve been probably in my career,\u201d he said on CNBC. \u201cI think this would have to get a whole lot worse before there was need to start bailing out airlines.\u201d<\/p>\n Airline fortunes have diverged a lot in recent years. Delta Air Lines and United<\/a> have reported huge profits, driven in large part by demand for premium seats<\/a>, while most others have reported more modest returns, or lost money.<\/p>\n Karoun Demirjian contributed reporting.<\/p>\n","protected":false},"excerpt":{"rendered":"Spirit Airlines is in advanced talks to secure a loan of as much as $500 million from the…\n","protected":false},"author":2,"featured_media":206535,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[66625,81885,81886,1452,29553,31482,5292,9,11,10,5007,5291,29554,81884,1069,901,1876],"class_list":{"0":"post-206534","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york","8":"tag-airlines-and-airplanes","9":"tag-bankruptcies","10":"tag-credit-and-debt","11":"tag-donald-j","12":"tag-duffy","13":"tag-federal-aid-us","14":"tag-fees-and-rates","15":"tag-new-york","16":"tag-new-york-headlines","17":"tag-new-york-news","18":"tag-oil-petroleum-and-gasoline","19":"tag-prices-fares","20":"tag-sean-p","21":"tag-spirit-airlines","22":"tag-trump","23":"tag-united-states","24":"tag-united-states-politics-and-government"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/206534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=206534"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/206534\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/206535"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=206534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=206534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=206534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}