Spirit Airlines, the budget American carrier that has faced financial struggles in recent years due to escalating costs, may cease operations as early as Saturday if a last-minute bailout from the U.S. government is not provided.
Negotiations Stall Over $500 Million Aid Package
Discussions between the airline and the government broke down on Friday regarding a $500 million assistance package, as bondholders expressed dissatisfaction with the proposed terms, according to CBS News.
The airline, which could file for bankruptcy for the third time since November 2024, has been on precarious financial footing since the COVID-19 pandemic in 2020. This instability stems from rising operating expenses, including a sharp increase in jet fuel prices over the past month, coupled with mounting debt.
Trump Weighs In on Potential Bailout
President Donald Trump was questioned about a possible eleventh-hour government bailout on Friday afternoon before departing Washington, D.C., for Florida. Trump stated, "Well, I guess we're looking at it. If we can do it, we'll do it but only if it's a good deal."
The Trump administration was informed that the airline was preparing to shut down within the next 24 hours. "I'd like to save the jobs, but we'll have an announcement some time (Friday)," Trump added. "We gave them a final proposal."
Sources told CBS News that the Florida-based company is currently maintaining operations and completing flights as usual. A spokesperson stated, "Spirit is operating as usual," declining to comment on the bailout negotiations.
CBS News previously reported that the airline only has enough cash to sustain operations for a few more days.
Bankruptcy Hearing Reveals Cash Crunch
On April 23, a lawyer representing Spirit Airlines revealed at a bankruptcy hearing that the company urgently needs cash to continue operating. Marshall Huebner told the hearing, as reported by CNBC: "The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer. So either new financing, either or both of new financing or access to almost $240 million of restricted cash, is absolutely essential. Round about, no later than the end of next week."
Huebner further explained that "several hundred million dollars" of the company's funds are "locked away and inaccessible" under the terms of its previous bankruptcy loan, with other funds held in separate accounts for payroll and tax payments. "Spirit now definitively stands at the crossroads," he said.
Contingency Plans for Customers
Several major airlines have indicated they are prepared to assist Spirit Airlines customers in the event of a shutdown over the weekend, according to Axios.
Spirit Airlines operates in more than 40 cities across the United States, as well as destinations in the Caribbean and Latin America.
