The Trump Administration is preparing to light $500 million on fire, handing taxpayer money to Spirit Airlines. You wouldn’t buy their tickets – but they’re going to make you give them your money anyway.
- This is a terrible precedent. Spirit is a bad investment, and government ownership (warrants in exchange for the loan) creates terrible incentives.
- It’s also blatantly illegal.
Secretary of Transportation Sean Duffy said this week that it’s a terrible idea. He’s called it ‘good money after bad.’ Once Trump has decided to do it, though, he’ll fall into line.
Spirit is a money-loser. They had no plausible business plan coming out of bankruptcy a year ago. And there’s no reason to believe that shrinking is going to make them perform better coming out of a second bankruptcy. They only need the money because private investors aren’t willing to fund their losses any longer.
I love that Spirit exists. They push down fares, although a much smaller Spirit will push down far fewer fares. It also makes things more difficult for ultra-low cost carrier Frontier, which is struggling. A more robust Frontier would be better for consumers nad low fares! With government ownership of a stake in the airline, though, that’s terrible for passengers.
- The Trump administration has a stake in the success of the airline
- When the Department of Transportation hands out slots at restricted airports, does this create an incentive for them to give slots to Spirit? The standard is public interest and the public benefits when the value in its stake goes up!
- Will the FAA have to check with the White House before imposing fines or restrictions on Spirit’s operation? Will they question whether they can act independently? Will this have a chilling effect on inspectors?
The Trump administration doesn’t want to see an airline go under on its watch, especially amidst high fuel costs, since its foreign policy (Iran) will be blamed – even though Spirit’s problems have little to do with and long predated high prices of jet fuel. As we approach the election, though, they’re looking to reach into your pockets.
Ironically enough, that makes Spirit Airlines no longer a low fare airline. You’re paying more for Spirit whether you fly them or not. That’s the ultimate ancillary revenue play!
But this is simply illegal. Without new legislation from Congress, there’s just no legal authority to extend loans to private businesses like this. Appropriations can only be used for things Congress made them for. The government can’t make obligations that they don’t have appropriations for. Under the Federal Credit Reform Act, loans and loan guarantees require budget authority.
I’ve written that my best guess is that the administraton claims authority from the Defense Production Act, which allows loans to private businesses to create, maintain, expand, protect, or restore capacity when needed for national defense. Spirit Airlines is not necessary for national defense. Come on. Nobody believes this. They’re less than 2% of domestic air travel capacity.
They’ll tell a story that Spirit is part of the national transportation system. Its failure would degrade low cost domestic air service, aviation labor capacity, emergency transportation resilience, and even emergency mobility in a defense emergency.
Again, nobody believes this. And no judge should buy it. But it will either (1) take too long to litigate to matter, or (2) a judge might simply give deference to the administration where national defense is invoked.
Using Treasury’s Exchange Stabilization Fund is even more legally problematic.
Stretching the law – violating all principles and norms of a rule of law – to get to whatever outcome is desired by the executive is in itself a bad result here.
Good coverage.
Additionally, a bailout would mean other airlines have to compete with a subsidized competitor, dragging the whole industry down.
One way to pay back the bailout is if all government officials flying would be forced to use Spirit. And until all of the bailout is paid back, tickets are free to government travelers.
First and foremost, can other airlines file suit to challenge this? Would it be considered providing an unfair advantage? Aside from Gary’s other applicable points.
Sure, it’s a horrible investment and simply supports a business that is not viable. However, you’d see the same response from a Democratic administration. No one wants to be seen as the bad guy that took out a “low fare airline.”
Finally, are we sure this just isn’t Trump babbling on without first consulting his staff. Duffy has already said he doesn’t think it’s a good idea. And could this simply be a guarantee and/or low cost financing for another airline to take Spirit on thereby averting at least for now thousands of jobs lost?
As Gary as also pointed out Spirit doesn’t have the luxury of time. If this can’t happen within the next few days creditors aren’t going to stand around waiting for a decision. They are going to move towards liquidation.
@Richard Rawlings – That’s actually an outstanding idea.
This is a terrible decision by the Trump administration.
Seems like a horrible idea to me and I disagree with it. You’ve mentioned most of the reasons of course, but this tripe about companies being “too big to die” is utter crap. Nor does it even apply here. Let Spirit run it’s course; it had iit’s chance and couldn’t adapt to the marketplace. Simple as that.
The Trump family and/or supporters likely will stand to gain from this but it will not be good for the industry, terrible precedent.
This is wrong and I have to pay for it. The stupid president is getting something from this and his corporate friends are going to take our money and run. We need to stand up and stop this crap.
For half a billion taxpayer dollars, just nationalize Spirit instead. I suspect the end goal is to use them as the carrier of choice for deportation flights.
Sure, it may blatantly violate the text of the law, but what about the Spirit of the law?
Blatantly illegal? Bah, Trump has those multiple times a day, and just try to stop him. He’s planning to bail out the United Arab Emerates, too. Constant corruption and cronyism. Bailing out his partners, companies or supporters with public money ensures loyalty and kickbacks.
Can the other airlines sue the courts for in a me too appeal?
I think the loan should only be approved if the Democrats quit preventing expedited repatriation of illegals to their native countries along with the foot dragging courts seem to be preventing ICE and DHS from doing their jobs.
Jobs for jet repatriation flights
Same people complaining about this are the same people who voted for him. No mercy. No quarter. You get what you deserve.
What’s $500 mil when you are blowing over $1.2 trillion a day on a war you decided to start?
the rule of law only applies to the orange man when someone is willing to stand up to him, and everyone picks their battles……
oh, re: illegal bailouts never paid back, the following numbers are all industries not just airlines who were the largest recipients……
september 2001: $15 billion
september 2008: $1.2 trillion
march 2020: $2.2 trillion
if the east wing fiesta is justified by NATIONAL SECURITY then anything is including a torture business on wings
Trump should make Spirit draw penis in sky.
Ray you do have a point, that is why I am thinking there may be more to the story coming out in a few days… President Trump does not throw good money after bad, after all he is a businessman unlike most politicians
Is the other part of the story maybe UA, WN, or AS. Bets are on.
Classic liberal hypocrisy on full display.These are the same people who have zero problem with the disastrous BEAD program — a bloated failure that spent billions of dollars and connected not a single home.Yet liberals cheer loudly as Democrats blow $180 billion taking care of illegal aliens.Taxpayer money only seems to matter when Republicans spend it. When Democrats waste it on useless boondoggles and actively support illegal activities, suddenly it’s “compassion” and no one bats an eye.
Pure, shameless double standard.
@BlackHill – So that somehow makes this complete abject waste of $500 million a good idea? Please explain. And know that I am asking this question as a conservative.
I see this 500M as fedgov signaling to the other airlines to work amongst themselves to subsume Spirit before they emerge from bankruptcy.
Trump doesn’t do anything for free. What is the quid pro quo?
How much Trump Coin do the Spirit executives have to buy? How much of the $500M bailout has to be kicked back to Trump as a campaign donation? Does Barron get named Chairman of the Board?
@klima nothing confirms “bot” better than touting orange man’s business acumen
I agree w/ Gary on the saneness of anyone investing in NK but let’s not pretend that only the red team does things that are not supported by law.
and the US government HAS made money on loans to the US airline industry which is probably why they are willing to do it again. Many US airlines still have covid loans which can’t be discharged in bankruptcy.
You will simply have a couple of airlines – likely led by WN and DL – which have good balance sheets and the rest of the airline industry that will be propped by government loans on top of massive previous debt which will only grow during the next year or so of high prices.
airlines and trucking companies are being disproportionately hurt by the war; these are loans and not direct subsidies.
The industry is cutting capacity but the US airline industry is already heavily concentrated; airlines that want to grow will either have to do it organically or buy assets which other airlines are ready to get rid of.
and the “loser” airlines (financially) will have to keep shrinking in order to push their margins up.
no one wants to make the tough call of lettting a high profile company die because of bad public policy – whether that was post 9/11, great depression, covid, or the Iran war
@mike blackhill is probably also a bot
$180 billion taking care of illegals?
comedy
@dunn “the US government HAS made money on loans to the US airline industry”
the absurdity of this statement is immeasurable with current technology
I don’t like the potential loss of competition, jobs, or options for passengers, if they fail. I also don’t like a bailout (loan or grant), if we, the taxpayers, get near nothing in return.
Sure, some of you will blame others (lame), but, fellas, let’s be honest… it’s the war; it’s oil; it may happen to others soon. So, maybe, prepare for that, and include stipulations, like new worker and consumer protections (I’d think low/no interest loans for airlines, an EU261 style law, prohibitions on stock buybacks and excessive executive bonuses are a good start.)
It sure is wild to see ye faux-conservatives (@Mike Hunt, included) have to become economic theory contortionists on here. “Let them fail!” But, also, “we still love you, Daddy!” and “hit me harder (with tariffs, and new wars)!”
Old-school and neo-fascistic Republicans alike each seem to wreck the economy, blowout the debt/deficit, happily do socialism for corporations and the super-rich, while forcing rugged individualism and austerity for the poors/out groups. Then, inevitably, the Dems will have to clean-up; but, you’ll use corrupted media to blame them anyway. Rinse and repeat. Prove me wrong.
@Richard Rawlings
I say go one step further. Force Donald Trump and all cabinet officials flying domestically to use Spirit. Also, all government travelers would be excluded from sitting in “big front seats”.
Follow the money. Who will profit from this and how are they connected (or contributing) to members of Congress or the White House?
@Tim Dunn — Nice ‘but, but… the Democrats’ you got there. Weak. Then, the audacity of… “led by WN and DL”… Ok, pivot to how this is good for you and yours. Pathetic.
@drrichard — Well said, sir. In less than 200 days, I hope that the nation regains its conscience, oversight over our government, its corrupt officials, media, and corporations who have clearly abused their power. (Couldn’t believe the latest Cabinet-level scandals, like Chavez-DeRemer, as well as her husband and father’s violations of law and ethics.) Just when you think it can’t get any worse, it does. This era makes Bush and Nixon look like saints (and they weren’t).
I’m with @Richard Rawlings. It would be worth the waste of tax dollars if ALL government officials were FORCED to fly Spirit. No more Delta. No more private jets. Every Senator, Congressman, Cabinet member. Make every single one of them fly Spirit. Including staffers. You get a paycheck from Uncle Sam (even indirectly via a contract), you fly Spirit.
Oh, the entertainment value alone would be worth the money.
“blatantly illegal”? There you go again. If you say so.
I personally think the Spirit situation should play out in the bankruptcy court before intervention. Intervention is premature.
“President Trump does not throw good money after bad” The clear reputation of DJT is that he is very good at making money in deals where the other parties lose and generally feel screwed. Partner with Trump and it’s looking like you’ll get $3 and he’ll make $97. Oops, DJT finds a loophole that means you lose $10 instead and he gets $97.01. So, DJT will gladly through other people good money after bad.
@George Romey — You suggested we pause to ensure this isn’t the President of the United States merely “babbling on without first consulting his staff.” Friends, how have we gone this low? If it were the other party, you’d never give them the benefit of the doubt like that. Ever. You nearly tarred and feathered the other guy for wearing a tan suit. Hold onto your Wawa sandwiches, pals.
hagbard
whether you like it or not, the US government has made money loaning money to US airlines and continue to make money as the lender of last resort.
that is why they are doing it again.
in contrast to other spending, the US does make money on propping up airlines even as it also keeps the current administration from being forced to reduce competition by allowing bad airlines to fail.
@Thing 1 — If so, watch as over-night Spirit becomes the most luxurious, reliable airline… with a mattress in the back of each aircraft, in case Kristi and Corey need it. Or, Kristi’s busty husband has to make a private call back there.
How much is the Trump crime family getting out of this? I wonder.
@Tim Dunn — Who/what really determines ‘good’ or ‘bad’ within the context of airlines? Is it objective, or is it subjective? Operational reliability? Passenger experience? Financial performance? Investors? Profits? Quarterly? Annual? Long-term? OTP? RASM/CASM? Load factor? Loyalty programs? Co-branded credit cards? Airline alliance? NPS? Yield! Are you the sole judge, jury, and executioner? How about ‘vibes’? Over-simplification for a complex, nuanced evaluation, like usual.
The current President considers himself an Apex Dealmaker. This is a deal, therefore it needs to be made.
A bankruptcy judge would have to approve this loan. Let’s mark this one as developing.
@Other Just Saying – if you think there’s a plausible argument why this is legal, say what it is. If you think I’ve erred in my explanation for why it isn’t, say what it is. Otherwise…
@Ray: The war in Iran is costing between $1 billion and $2 billion per day — not “trillion.”
Yes, that’s a lot, but a trillion is a thousand times as much as a billion.
@Gary Leff — Ever seen the movie “Wanted” (2008)… Morgan Freeman delivers that line: “Otherwise… shoot this mother…” *chef’s kiss*
@Joshua K. — Maybe @Ray was just thinking of the administration’s proposed $1.5 trillion defense budget for fiscal year 2027, the largest year-over-year increase in defense spending in the post-World War Two era. 2026 was under $900 billion (still a lot, and the Pentagon has never passed an audit; Department of Defense failed its annual independent audit for eight consecutive years.) But, I’m sure there’s nothing to see there, right? RIGHT??
@Richard Rawlings : The price of the first seat will be $500m.
I am on a subway now:
(1) You are speculating on the authorities he would be using. Then based on that speculation, you are declaring it illegal. Bit premature if you ask me.
(2). There has been an ongoing debate about Article 1 Congressional powers and Article 2 Presidential powers since the Constitution was created. We do not live in a Parliamentary system. Maybe you missed it.
At the end of the day, you want it be illegal so bad, that you are ignoring the obvious counter like that every President does similar things . Just a few modifiers would fix it.
@Other Just Saying – I am steelmanning, coming up with the *most plausible* and *most potentially legal* avenue he could use. You haven’t offered another at all or offered why my analysis is incorrect. That’s not good faith argument.
@hagbard celine : Actually, a measurable way to reduce the deficit (and a real one, unlike tariffs that basically tax Americans to reimburse Americans) is to take all the bailouts of the past, and create taxes designed to reimburse the taxpayer the real, interest included, value.
For example, GM was bailed out in 2008 to subsidize UAW wages. Create a tax on all bailout car companies dedsigned to recoup that (as specified) over a 5-10 year period.
This practice would have the added benefit of reducing the moral hazzard inducing companies seeking to go bankrupt in order to get a bailout.
@Tim (Delta) Dunn: “the US government has made money loaning money to US airlines”
Utter nonsense. They have run to the taxpayer and got away with murder. The latest case being the COVID ripoff.
@Tim (Delta) Dunn: “airlines and trucking companies are being disproportionately hurt by the war; these are loans and not direct subsidies.
The industry is cutting capacity but the US airline industry is already heavily concentrated; airlines that want to grow will either have to do it organically or buy assets which other airlines are ready to get rid of.
and the “loser” airlines (financially) will have to keep shrinking in order to push their margins up.”
Utter nonsense. You should do all your flying from platform 9 3/4. You bring to industry analysis what Rosie O’Donnell brings to string theory.
let us guess
L3 works for one of those money-losing airlines that still has covid loans
I love the Richard Rawlings idea… make all government employees required to use it. The ticket price would go against the government loan as a pay down. Love that idea!
I’m old enough to remember TARP1 (Bush) and TARP2 (Obama). While I haven’t looked recently, those “bail outs” turned out to be excellent investments by our government. We kept the entire automobile industry in business and provided a terrific ROI on our money.
Rather than letting Gary Leff speculate, using his far-left ideology and high level of TDS bias, why don’t we all just wait and see what this loan (if it happens) actually looks like. When it looks like a bad deal, we should say so. When it looks like a medium deal, we should say so. When it looks like a smart deal, we should praise it as well. We simply don’t know yet.
One other thought is… would it be more effective and easier to part out Spirit’s hubs and employees under government tutelage kind of Postmaster Brown style?
@Other Just Saying — Which subway? MTA? BART? SEPTA? CTA? WMATA?
@Jack Meehoff — LOL. Since when is Gary far-left? Bahaha.
@KlimaBXsst — What hub(s)? Psh. Maybe FLL qualifies.
@1990 You have to be half witted. Like President Mushbrains was any better while you all claimed he “was sharp as a tack.” Personally, I think we need an age limit of 65 for President, among some other rules.
And don’t think for one second if this happened under President Mushbrains the Mushbrain Administration wouldn’t be doing same. No one wants to get tagged with the guys that destroyed a “low fare airline.”
I see Trump’s face on each rudder/tail coming.
There has to be something in it for him. $$$$$.
How bout the Trump Shuttle? Oh wait already did that w predictable results. Nothing he does is legal so why any surprise?
@KlimaBXsst I nearly laughed so hard I shot coffee out of my nose when I read your post. Exactly how many businesses has Trump bankrupted in his career and exactly how many times has he asked for bailouts? IIBH, I’ve lost count.
My issue is this (and I have no issue with Spirit). A bailout is not Trump’s money, it’s my money, and your money. I have no interest in my tax dollars funding a business that is no longer a going concern when we can’t even be bothered to address childhood hunger in some communities.
I am sorry that Spirit is on its last leg, and I’m sorry thousands of people stand to lose their jobs. Business fail every day. It’s called capitalism. What Spirit is asking for is basically socialism, and Trump is preparing to go along for the ride…or will he TACO?
Spirit’s management could apply for student loan forgiveness. They are still learning how to run an airline.
@George Romey — You must know that #46 had a legitimate, professional administration; like, sure, you might not agree with their decisions or policy preferences, but they knew what they were doing, and were not so blatantly corrupt as #45/47.
As for age-limits, I’m not ageist; I do respect actual experience and wisdom, so I’m not sure 65 is the right number (or not), say for pilots or Presidents; but, what I will say is that the gerontocracy in the US these days has become extreme. You probably wouldn’t dare read it, but I recommend author Samuel Moyn’s recent op-ed in the NYTimes, titled: ‘Older Americans Are Hoarding America’s Potential,’ from April 21, 2026. Worth thinking through the nuance there.
@nsx at FlyerTalk — Zing! (Sorry, *those* loans are still non-dischargeable. Oof.)
It’s the right thing to do.