NEW YORK — Spirit Airlines is engaged in ongoing negotiations with federal officials regarding a potential financing agreement that could allow the low-cost carrier to successfully navigate bankruptcy proceedings without shutting down operations, according to the company’s legal representative.
During Thursday’s bankruptcy court proceedings in New York, Marshall Huebner from Davis Polk informed the court that information about the proposed agreement has been distributed to Spirit’s three main creditor groups.
The budget airline has faced financial difficulties for an extended period, having entered Chapter 11 bankruptcy protection in November 2024, following a previous filing in August 2005. According to Huebner, federal financing would enable the airline’s current restructuring efforts and enhance Spirit’s competitive position in the market.
Rising jet fuel prices linked to the Iran conflict have affected the entire aviation industry, prompting creditors to recently question whether Spirit can continue operating. This has raised concerns that the airline known for its distinctive yellow aircraft might be compelled to liquidate its assets and halt service.
President Donald Trump fueled speculation about potential assistance Tuesday when he suggested finding a buyer for the troubled carrier and indicated federal support might be available to maintain Spirit’s operations.
When questioned about possible government intervention, Transportation Secretary Sean Duffy informed reporters that Trump had instructed the Department of Transportation to examine available alternatives.
Officials have not disclosed the financial terms or amount of the proposed aid package. However, The Wall Street Journal and Bloomberg cited unnamed sources indicating the assistance could total $500 million, with the government potentially retaining rights to obtain a significant ownership stake in the Florida-based airline.
The White House Wednesday attempted to attribute Spirit’s financial troubles to the previous Biden administration, which filed a lawsuit in 2023 to prevent JetBlue Airways from acquiring Spirit for $3.8 million. More than a year before Trump assumed office, a federal judge in Dallas rejected the proposed Spirit-JetBlue combination, determining it would increase ticket prices for travelers.
However, various legislators and even Duffy have expressed reservations about government intervention to preserve Spirit. During a CBS interview broadcast Tuesday evening, the transportation secretary raised concerns about establishing a broader precedent.
“Then who else comes to my door?” Duffy said, referring to other airlines potentially requesting government aid. “The question will be, can we do anything to save Spirit and make it viable, or would we be putting good money into a company that inevitably is going to be liquidated?”
Multiple lawmakers from both parties have opposed a potential bailout. Texas Senator Ted Cruz posted on X Wednesday that such an agreement would be a “terrible idea.”
“If Spirit’s creditors or other potential investors don’t think they can run it profitably coming out of its second bankruptcy in under two years, I doubt the US Government can either,” Arkansas Senator Tom Cotton posted. “Not the best use of taxpayer dollars.”
Conversely, the union representing Spirit’s pilots has expressed “strong support” for a rescue package.
“Spirit is the reason so many Americans can afford to visit family, travel for work, or take a vacation,” said Capt. Ryan P. Muller, chair of the Spirit Airlines ALPA Master Executive Council. “When Spirit enters a market, fares go down.”
The airline’s modern aircraft fleet has attracted potential buyers, though previous acquisition efforts by competitors including JetBlue and Frontier have failed both before and during Spirit’s initial bankruptcy proceedings.
