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Spirit Airlines flights are still operating — but possibly not for long. A rumored shutdown could come as soon as tonight after talks over a $500 million federal bailout failed, leaving creditors, the government, and the bankrupt airline unable to agree on who gets paid first.
Robert Isom addressed the airline deal rumors employees were already talking about internally: United, Alaska and Spirit. United is a hard no, Alaska is the partnership American wants to expand, and Spirit is not a fit — though American would consider assets and stranded passengers.
The simple story about Spirit Airlines is that the Biden administration killed the carrier by blocking JetBlue’s bid to buy it, but that is too neat and mostly wrong. Spirit was already failing because its costs rose, its product stopped matching what customers wanted, and the antitrust move that really undercut any plausible rescue came earlier, when the government killed JetBlue’s alliance with American.
The White House is trying to justify a $500 million Spirit Airlines rescue by claiming the carrier is somehow essential to national defense, even though Spirit is a failing ultra-low-cost airline with no obvious military necessity.
President Trump is now openly floating a federal rescue of Spirit Airlines, saying “I think we just buy” the carrier even as his administration still has no clear legal path to make that happen. Here’s what betting market odds look like on the outcome.
Spirit Airlines told a bankruptcy judge it could run out of usable cash next week, even after carving out restricted funds for payroll, taxes, and creditor-controlled accounts. Spirit is not presenting a real path back to profitability — it is asking the court to help it survive long enough for a legally dubious government bailout to arrive (which it may quickly burn through).
Flight attendants union head Sara Nelson is now urging President Trump to throw Spirit Airlines a lifeline, a remarkable turn for one of organized labor’s most prominent progressive voices. Her appeal doubles as an argument that the Biden administration’s antitrust decision helped push Spirit to the brink, even as the bailout now being discussed appears to have no real basis in law.
President Trump had not yet decided whether to rescue Spirit Airlines when two of his cabinet secretaries argued the case in front of him, with one side pitching a bailout as a midterm political win and the other warning it would look like a costly rescue of a failing company. The striking part is not just that the White House is weighing a $500 million loan and a potential 90% ownership stake, but that there is still no plausible legal authority for the federal government to do it.
Spirit Airlines is now days away from liquidation, but its collapse did not come out of nowhere. The airline lost the cost advantage that once made it a success, kept selling a product customers increasingly did not want, and then watched bigger rivals learn how to match its fares while offering a better experience.
The Trump administration is reportedly preparing a $500 million bailout for Spirit Airlines, a carrier that has already burned through bankruptcy, taxpayer aid, and private capital without finding a viable business model. If this goes through, it will not just hand public money to a failing airline — it will normalize using legally dubious federal power to socialize losses for companies the market has already given up on.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
