NEW YORK (AP) — A lawyer for Spirit Airlines said Thursday that the budget carrier was in advanced talks with the U.S. government on a financing deal that would help it emerge from bankruptcy protection instead of having to shut down.
Details of the potential deal have been shared with all three of the company’s primary creditor groups, Marshall Huebner, a lawyer with Davis Polk, said during a U.S. Bankruptcy Court hearing in New York.
Spirit has struggled with losses for years. The airline filed for Chapter 11 protection in November 2024 and again in August 2005. Government financing would make the airline’s latest reorganization possible and help Spirit be more competitive, Huebner said.
With the Iran war driving up jet fuel costs for all airlines, creditors earlier this month expressed doubts about Spirit’s ongoing viability, raising the possibility the airline recognized for its bright yellow planes would be forced to sell its assets and cease operating.
President Donald Trump stoked speculation of a lifeline on Tuesday when he encouraged a buyer to rescue the struggling airline and suggested the federal government could help keep Spirit afloat.
Asked about possible government relief, Transportation Secretary Sean Duffy told reporters the same day that Trump had directed the Department of Transportation to review possible options.
The size and terms of the financial aid under discussion have not been shared publicly. The Wall Street Journal and Bloomberg both reported anonymous sources saying the amount was $500 million and the government would reserve the option to acquire a sizable stake in the airline, which has its headquarters in Florida.
The White House on Wednesday attbmpted to blame Spirit’s predicament on the Biden administration, which in 2023 sued to stop JetBlue Airways from buying Spirit for $3.8 million. A little more than a year before Trump replaced Joe Biden as president, a federal judge in Dallas blocked a proposed Spirit-JetBlue merger, saying it would drive up airfares for passengers.
But some lawmakers and even Duffy have voiced skepticism about the government stepping in to keep Spirit alive. In a CBS interview that aired Tuesday night, the transportation secretary questioned whether a financing deal would set 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?”
Several lawmakers, both Republican and Democrats, have balked at the idea of a bailout. Sen. Ted Cruz of Texas wrote on X on Wednesday that a deal for Spirit 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,” Tom Cotton, a senator from Arkansas, posted. “Not the best use of taxpayer dollars.”
The union that represents the airline’s pilots, on the other hand, voiced “strong support” for a rescue deal.
“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.”
Spirit’s relatively young fleet has made it an attractive acquisition target. But previous buyout attempts from budget rivals like JetBlue and Frontier were unsuccessful both before and during Spirit’s first bankruptcy.
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AP writers Josh Boak in Washington and Rio Yamat in Las Vegas contributed to this report.
Mae Anderson, The Associated Press
