The Trump administration is discussing a potential financial package for Spirit Airlines that could provide up to $500 million in government-backed financing to help the carrier continue operating during bankruptcy, according to reports from multiple U.S. media outlets.
The proposed package would reportedly begin as debtor-in-possession financing during Spirit’s Chapter 11 process before being converted into longer-term debt once the airline exits bankruptcy. The U.S. government could also receive warrants that may translate into a large equity stake in the carrier.
No final agreement has been announced, and the White House has not confirmed the reports.
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Spirit entered bankruptcy after years of financial struggles that worsened following the collapse of its planned merger with JetBlue Airways. The carrier has also faced rising operating costs while trying to restructure its network and reduce fleet expenses.
Recent increases in jet fuel prices have added new pressure to that plan. Fuel costs rose sharply after the conflict involving Iran disrupted traffic and oil flows near the Strait of Hormuz, forcing airlines worldwide to absorb higher operating expenses or pass costs to passengers through higher fares.
Spirit had previously based its restructuring plan on significantly lower fuel prices. The recent spike has raised questions about whether the airline can complete its bankruptcy process without securing additional liquidity.
President Donald Trump told CNBC this week that he would prefer to see Spirit acquired, but said government involvement remained possible.
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Any rescue package would likely face criticism from rival airlines, which are also dealing with higher fuel costs and may oppose federal support directed at a single carrier.
