Spirit Airlines is close to getting a bailout. What's in it for U.S. taxpayers?

By Claudia Assis

Spirit confirms 'very advanced discussions' with U.S. government

Spirit Airlines was hoping to emerge from bankruptcy in the next few months. The government may lend it a helping hand sooner.

Ultralow-cost Spirit Airlines is fighting for its survival at a tricky time for airlines, which are cutting flights and raising fares and fees to stay ahead of soaring jet-fuel prices.

Spirit, however, might have an ace up its sleeve: It seems to have captured President Donald Trump's attention.

Earlier this week, Trump called for buyers for Spirit's parent company, Spirit Aviation Holdings (FLYYQ), and mused that the U.S. government should help out the struggling airline.

The Wall Street Journal on Wednesday reported plans for a bailout, even as others in the industry struggled to see benefits for U.S. taxpayers and questioned the need for a bailout despite the industry's current woes due to rising fuel prices.

Spirit on Thursday confirmed it was "in very advanced discussions with the federal government" about the terms of a financing package. Details of that package have been shared with the company's main creditors, it said.

"The financing would do more than make the reorganization possible; it would create an appropriately capitalized, fierce competitor in the space," Spirit said.

The company did not mention amounts, but according to the Wall Street Journal, which cited people familiar with the discussions, the administration is close to a rescue deal to lend Spirit as much as $500 million in exchange for a stake in the ailing company.

The White House did not directly address the potential deal after MarketWatch reached out for comment on Wednesday. Instead, spokesman Kush Desai said in a statement to MarketWatch that Spirit "would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline's merger with JetBlue."

"The 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," Desai said.

Last year, the U.S. government took a stake in chip maker Intel (INTC) and backed deals related to nuclear energy and rare-earths minerals - mostly in the name of national security.

In the case of Spirit, a government loan could stabilize its balance sheet, but it is "unclear how this investment somehow stabilizes Spirit's operations," said airline analyst Stephen Trent, president of SDT Capital Advisors.

"The carrier is unprofitable and has continued to burn cash," Trent said. "Overall, it is really unclear fundamentally what this investment could solve, or what might be the eventual [return on investment] for the U.S. taxpayer."

Spirit has struggled to remain afloat and shore up its balance sheet. In August, it filed for bankruptcy for the second time in less than a year.

A few months later, it said it had reached a deal with its creditors and expected to emerge from bankruptcy as a slimmer airline - one not solely focusing on budget travelers, but also offering premium products.

A focus on premium fares would be a departure from Spirit's ultralow-cost business model. But the carrier would be taking a well-worn page from the playbook that major U.S. airlines have followed in recent months.

Airlines such as United (UAL) and Delta (DAL) have focused on a web of perks, loyalty points, credit cards, lounge privileges and other incentives to lure travelers to their premium - and more profitable - airfares.

See also: Rich fliers are making United and Delta billions by buying premium perks

United CEO Scott Kirby has been a critic of the low-cost model. On Wednesday, Kirby lobbed some of that criticism at Spirit, saying its business model is "fundamentally flawed."

Well-run airlines are still solidly profitable, even as fuel prices are rising, Kirby said in a post-earnings call with analysts. The difficulties are not nearly enough to require a bailout, he said.

Spirit and JetBlue (JBLU) ended their merger deal in 2024. The deal was put in peril in January of that year when a court sided with the Justice Department, which said that a merger between the two airlines would hurt competition.

Robert Schroeder contributed.

-Claudia Assis

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04-23-26 1256ET