The Trump administration was nearing a deal to support bankrupt Spirit Airlines, but the central terms remained unconfirmed.
Reuters reported the government could lend Spirit as much as $500 million in exchange for warrants that could give Washington a stake in the carrier, a step that would amount to a rare federal intervention for a single airline rather than industrywide relief.
The immediate issue is whether Spirit, already in its second Chapter 11 case in less than a year, can keep its restructuring on track as fuel costs rise and liquidity come under pressure.
Spirit had sought hundreds of millions of dollars in emergency funding to offset higher oil prices and avoid possible liquidation.
In court filings and company statements earlier this year, Spirit said it had reached a restructuring agreement with lenders, aimed at emerging by late spring or early summer, and expected to cut debt and lease obligations from about $7.4 billion to roughly $2 billion to $2.1 billion after emergence.
President Donald Trump raised the possibility of government help Tuesday, saying on CNBC that Spirit's 14,000 jobs were a factor and that "maybe the federal government should help that one out."
Transportation Secretary Sean Duffy, however, told Reuters he was wary of "put[ting] good money after bad" and questioned whether taxpayer support would only delay a collapse if no private buyer sees a viable business. Duffy also said Trump had directed the department to review possible options.
That leaves the situation in a narrow but consequential posture: Trump has signaled openness to intervention, Duffy has expressed skepticism, and the administration has yet to announce any final action.
Spirit said it was operating normally and has not commented publicly on the latest discussions. The airline has, however, been selling assets and adjusting operations in an effort to stabilize, but high fuel expenses have undermined its post-bankruptcy projections.
What happens next will likely hinge on whether the administration decides that Spirit's role in low-cost air service and employment justifies federal risk, despite the airline's repeated bankruptcy filings and unresolved questions about long-term profitability.
Reuters contributed to this report.
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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