Spirit Airlines Bailout Talks Stall — Here’s the Latest

What looked like a potential lifeline for Spirit Airlines has hit a wall. Just over a week after the Trump administration was reported to be in advanced talks on a $500 million rescue package for the embattled budget carrier, those talks have stalled — and Spirit is reportedly just days away from running out of cash.

Here’s the latest on where things stand, plus a recap of how we got here.

The Latest: Bailout Talks Hit an Impasse

Bailout negotiations between the federal government and Spirit Airlines have stalled, with the carrier’s creditors at the center of the holdup, CBS News reports.

The deal on the table would have the government lend Spirit $500 million in exchange for taking control of up to 90% of the airline — a far cry from the minority stake originally floated. Under the proposed terms, the federal government would also become the senior bondholder, putting it ahead of existing creditors when it comes to getting paid back, and the government reportedly have the right to select a board member.

That structure is exactly where the deal has run into trouble. Spirit has the backing of 2 of its 3 major creditor groups, but it needs all 3 to sign off for a binding agreement with the federal government. The holdouts include Citadel (Ken Griffin’s hedge fund, which reportedly submitted a counterproposal that the government rejected), Ares Management Corp, and Cyrus Capital.

Each of those creditors has pushed back over concerns the deal would reduce the value of what they’re owed.

A bankruptcy court hearing originally set for April 30 was postponed as negotiations continue. According to a court filing, talks remain ongoing, but Spirit doesn’t have much runway left. Reports indicate the airline only has enough cash to operate for a matter of days, not weeks.

Political opposition has been ramping up alongside the creditor pushback. Republican Senators Ted Cruz and Tom Cotton have publicly criticized the idea of a single-airline government bailout, and FAA Administrator Bryan Bedford reportedly said the airline “can’t have any of our money.”

For now, Spirit is still flying, though the path forward is anything but clear.

Spirit Bailout Talks: How We Got Here

Before the latest updates, CNBC reported that the federal government was “in advanced talks” on a deal that would float the embattled low-cost carrier a lifeline of $500 million.

A bailout package of this magnitude would give the government a minority stake in the airline, which is in the middle of its second Chapter 11 bankruptcy in less than a year, and reports swirled last week that the carrier was staring down an imminent liquidation, though that has not yet come to pass.

The president expressed support for a bailout, saying on CNBC’s Squawk Box, “Spirit’s in trouble, and I’d love somebody to buy Spirit. It’s 14,000 jobs, and maybe the federal government should help that one out.” 

However, Transportation Secretary Sean Duffy isn’t sold on the idea, noting that Spirit has yet to turn a profit, despite attempting multiple times to restructure successfully under bankruptcy protection.

There’s the question of whether this could happen at all, even if there were widespread support within the administration. Providing financial support to a private company like this requires congressional legislation, and there would likely be stiff opposition from both Congress and the nation’s other airlines, which could theoretically sue the government and claim they’d be forced to compete against a subsidized airline.

While the government has bailed out airlines before, most recently during the COVID-19 pandemic and before that following the September 11, 2001, attacks, those funds were directed at the industry as a whole, not at an individual carrier.

Final Thoughts

Spirit Airlines is in an uncomfortable spot. The carrier needs a deal, the administration appears willing to make one, but a key group of creditors and a chorus of political opposition are standing in the way — and the clock is running fast. Whether the next chapter brings a last-minute compromise, an outright collapse, or another unexpected turn remains to be seen, but with cash dwindling and the bankruptcy court watching closely, a decision can’t be far off.

We’ll continue to update this story as it develops.