Spirit Airlines is close to securing financial assistance amounting to $500 million from the federal government, a source familiar with the discussions stated.
The arrangement is anticipated to involve the federal government taking a stake in the struggling carrier, which has faced earning difficulties since the Covid pandemic.
Spirit also managed to avoid becoming the first major U.S. airline in 25 years forced to cease operations entirely due to monetary woes. Aircraft fuel prices have roughly doubled since the onset of the Iran war, disrupting Spirit’s plans to emerge from its second bankruptcy reorganization by 2024.
The source informed CNN that the pact could be announced as early as late Wednesday or Thursday. It is intended to afford the airline an opportunity to finalize its reorganization.
A shutdown would result in thousands of Spirit staff losing their jobs, and millions of travelers with Spirit tickets would have to scramble to arrange alternative travel. This would likely also drive fares up across the U.S. aviation sector.
But while the potential deal might benefit Spirit’s customers and workforce, it is likely to draw negative reactions from the remainder of the aviation industry. All carriers are contending with rising fuel costs, which represent the second-largest expenditure for airlines after labor.
Past bailouts for American airlines were also executed at an industry-wide level, instead of supporting one relatively small air carrier. Those preceding rescues were prompted by passenger fear of flying following terror attacks or during a pandemic, rather than high expenses.
Spirit declined to comment on the potential arrangement, telling CNN, “We are conducting our business as usual.”
The White House also declined to confirm the discussions but faulted the Biden administration, which blocked the merger with JetBlue, for the carrier’s poor financial state.
“The Trump administration continues to monitor the situation and the overall condition of the U.S. aviation sector, upon which millions of Americans rely daily for essential travel and livelihoods,” White House spokesperson Kush Desai remarked on Wednesday.
Impact on Fares
Spirit pioneered the offering of ultra-low base fares in the U.S. market. Although this meant extra charges for things like carry-on luggage, the model drove fares down for passengers across the American industry. It spurred major airlines to introduce cheap “basic economy” tickets.
Airfare costs are largely swayed by the supply of seats and the demand for travel across different routes. Removing even just the 2% of domestic capacity that U.S. carriers like Spirit are slated to operate this summer would reduce that supply and increase fares.
With robust summer flight bookings and concerns over aviation fuel expenses, airlines have already raised fares by 20% compared to last year.
Potentially even higher fares might give Spirit leverage to obtain government support.
Trump Opens Door to a Deal
In an interview with CNBC on Tuesday, President Donald Trump appeared to endorse the notion of financial aid for Spirit in exchange for the government taking an equity stake.
“You know, Spirit is having trouble, and I would really like for someone to buy Spirit,” he said. “That’s 14,000 jobs, and perhaps the federal government should assist. And I’ve told my people.”
Later on Tuesday, Transportation Secretary Sean Duffy signaled that the President had directed him to explore such a deal.
“(When) the President says, ‘Look,’ and he’s my boss, and we will certainly look,” he stated.
However, there is already widespread opposition from the nation’s aviation sector.
FAA Administrator Brian Bedford, who was on stage alongside Duffy during his remarks, interjected: “They can’t take our money.”
United CEO Scott Kirby also condemned the idea of a Spirit bailout while speaking to analysts on Wednesday.
“Well-run airlines remain consistently profitable even under conditions like these, as evidenced by United,” he asserted. “I don’t think this crisis is severe enough to necessitate an airline bailout.”
Kirby added that Spirit’s problems were well-established even before the Iran war.
“It was pretty evident that Spirit’s business model was fundamentally flawed, and the airline would not have made it (even prior to the fuel spike),” he said.
“Substantial Doubt” About Its Future
As of last August, Spirit employed 25,000 workers and contractors when the company filed for Chapter 11 bankruptcy for the second time, which permits firms to reorganize amidst mounting losses.
Spirit ranked eighth among U.S. airlines in 2025 based on offered seats. However, despite its size, it had repeatedly warned in recent years about “substantial doubt” concerning its ability to continue flying.
In late February, Spirit announced reaching an agreement with creditors that would allow it to remain operational and exit its second bankruptcy as a smaller entity without such substantial debt.
Just three days after that announcement, the war initiated by Iran began, leading to a surge in oil and jet fuel prices. Two weeks later, Spirit again warned it risked closure.
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