President
Spirit, buffeted by the recent surge in fuel costs, had been in talks with the US government on rescue financing, but those conversations hit an
The airline is making preparations to wind down as its liquidity position worsens and the prospects of winning a bailout dim, said the people. Spirit has started to notify some creditors that it is preparing to suspend operations as soon as Saturday morning without a government rescue, some of the people said.
“If we can do it, we’d do it, but only if it’s a good deal.” Trump told reporters Friday at the
He also said any deal would put the US government ahead of other lenders so that its claims get first priority if the airline fails. “We come first,” Trump said. “USA first.”
A spokesperson for Spirit said the airline is operating as usual and declined to comment on ongoing discussions. Representatives of the Commerce Department and the Transportation Department didn’t immediately respond to requests for comment.
“To help customers whose travel may be disrupted, we immediately implemented fare caps on Main Cabin tickets for Spirit routes where we also offer nonstop service,” American added in a statement.
Spirit had planned to exit bankruptcy by the summer after reaching an agreement with creditors on a plan to trim billions of dollars in debt and reduce the cost of its fleet. Higher fuel costs stemming from the ongoing war in the Middle East instead put the carrier
WATCH: Spirit Aviation Holdings is laying the groundwork to shutter its operations as it runs increasingly low on cash. Sid Philip has more. Source: Bloomberg
The airline for the last several weeks has been discussing terms of a possible bailout with the Trump administration where the government would provide up to $500 million in financing in exchange for warrants to purchase as much as 90% of the company once it emerges from bankruptcy.
Trump on April 23 said he was considering having the US purchase Spirit, saying it could be a potentially good investment for the federal government. He’d expressed a willingness earlier in April to provide federal assistance to the carrier.
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Spirit isn’t the only airline that’s suffering as a result of the US-Iran war. The chief executives of other budget carriers met with Transportation Secretary
The Association of Value Airlines, which represents low-cost carriers including
The group also wrote to congressional leaders on April 14 to request temporary relief from certain fees and taxes, including a suspension of the 7.5% federal excise tax on airline tickets, according to a letter
Spirit shares fell as much as 74% on Friday after the Wall Street Journal earlier reported that Spirit was preparing to cease operations. Shares of peers including
(Adds detail about timing of when Spirit operations may cease in third paragraph.)
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