Spirit Airlines prepares to shut down after Trump administration bailout falls through
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Erin KellerFri, May 1, 2026 at 6:30 PM UTC
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Spirit Airlines is preparing to shut down after failing to secure the critical financial support from the government needed to keep operating.
The struggling budget airline had been negotiating with the Trump administration for a $500 million rescue package that would have provided cash in exchange for equity-like warrants, giving the government up to a 90 percent stake. However, the effort has stalled because Spirit has been unable to secure the necessary backing from bondholders and government stakeholders, people familiar with the matter told the Wall Street Journal Friday.
There were reportedly disagreements within the Trump administration over whether and how to fund the bailout, while not all Spirit bondholders were on board with the deal, either, the sources claimed.
However, President Donald Trump also told reporters in the Oval Office Friday that his administration offered a “final” bailout to Spirit, warning the carrier may be forced to liquidate without it.
“If we could do it, we’d do it, but only if it’s a good deal this weekend, because they haven’t gotten a deal looking at it,” Trump said, CNBC reports. “I said I’d like to save the jobs but we’ll have an announcement sometime today...We gave them a final proposal.”
Spirit Airlines is moving toward a potential shutdown after a proposed $500 million government-backed bailout collapsed, The Wall Street Journal reported Friday (Reuters)
The Independent has contacted Spirit and the White House for comment.
Without agreement from both groups, the airline could not secure the funding it needed to continue operations, according to the Journal. As a result, people familiar with the situation say the airline is now preparing for the possibility of running out of cash and shutting down entirely, including plans to liquidate its fleet, though the exact timeline remains unclear.
Like other airlines, Spirit is facing intense pressure from rising fuel costs, which have roughly doubled since the outbreak of the Iran war. Without a government bailout, those higher expenses are quickly draining what’s left of Spirit’s cash.
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Under the proposed deal, the federal government would have offered Spirit up to $500 million in loans in exchange for warrants that could translate into a significant ownership stake, sources told the Journal. The Commerce and Transportation Departments were reportedly both involved in the discussions.
Trump also reportedly met with several Cabinet secretaries on April 21 to try to finalize the agreement, per the outlet. The next day, Trump told CNN, “I’d love somebody to buy Spirit. It’s 14,000 jobs, and maybe the federal government should help that one out.”
Spirit CEO Dave Davis told The Independent in a statement last week that he values Trump’s interest in the company, which operated its distinctive bright yellow planes and carried millions of passengers last year.
“We are grateful for President Trump's support and look forward to continuing to work with him and his Administration on a solution that protects thousands of jobs, preserves and enhances competition and helps ensure Americans continue to have access to affordable fares,” Davis said.
Spirit has already spent much of the past 18 months in Chapter 11 bankruptcy protection as it faces the threat of liquidation over rising fuel costs caused by the Iran war, Bloomberg reported last week.
Spirit has struggled to recover since the COVID-19 pandemic, as travel patterns shifted and many passengers increasingly preferred full-service airlines over ultra-low-cost carriers. The airline’s finances took a major hit, with losses piling up to more than $2.5 billion since 2020.
These ongoing challenges led Spirit to file for bankruptcy twice - first in November 2024 and again in August 2025. Despite this, the company initially showed signs of recovery after striking a deal with creditors to reduce its debt load and cut operating costs, raising expectations that it could emerge from bankruptcy by the summer.
However, that recovery path was disrupted when escalating geopolitical tensions, including strikes involving the U.S. and Israel against Iran beginning on February 28, added further uncertainty to global markets and travel conditions.
Source: “AOL Money”
