Trump gives Spirit final rescue proposal as airline prepares possible shutdown

By David Shepardson

WASHINGTON, May 1 (Reuters) – President Donald Trump said on Friday the White House had given Spirit Airlines and its creditors a final proposal to try to rescue the bankrupt airline, even as the budget carrier makes preparations to shut down if no deal is reached.

“We’re looking at Spirit. If we can help them, we will, but we have to come first,” Trump told reporters. “If we could do it, we’d do it, but only if it’s a good deal.”

Trump added he expected an announcement later on Friday. 

Two people familiar with the matter confirmed a Wall Street Journal report that Spirit is preparing to cease operations after hitting an impasse in talks with some creditors on a $500 million government bailout plan.

The White House has reached out to other airlines to discuss how to accommodate people who have Spirit tickets and could be stranded if the airline stops operating. United Airlines said it was preparing to support Spirit customers if the rival shuts down.

FINANCING FOR EQUITY

Trump said last month his administration was looking to buy the embattled carrier at the “right price.” 

Sources later said the administration had proposed $500 million in financing in exchange for warrants equivalent to 90% of Spirit’s equity.

There had been disagreements inside the Trump administration over whether and how to fund the bailout, the Journal report said, citing people familiar with the matter.

Not all Spirit bondholders were on board with the deal, the report added.

A rescue hearing scheduled for Thursday did not take place after talks over the terms of the government bailout continued.

A company spokesperson declined to comment on ongoing discussions, adding, “Spirit is operating as usual.”

The carrier’s demise would mark the industry’s first casualty linked to the Iran war.

Spirit’s volatile stock was down 25% on Friday.

Shares of rival Frontier Airlines rose 10%, while JetBlue Airways gained 7% following the Journal report.

Spirit had earlier reached a deal with its lenders that would have helped it emerge from its second bankruptcy by late spring or early summer. 

Those plans were derailed after the war triggered a spike in jet fuel prices, upending Spirit’s cost projections and complicating its bankruptcy exit.

The carrier built its turnaround plan on jet fuel costs averaging about $2.24 per gallon in 2026 and $2.14 in 2027, according to March disclosures. 

By the end of April, prices had climbed to around $4.51 a gallon, double the level assumed in its projections.

(Reporting by David Shepardson in Washington Shivansh Tiwary in Bengaluru; Additional reporting by Gram Slattery in Washington; Editing by Anil D’Silva, Sriraj Kalluvila, Rod Nickel)