Spirit Airlines prepares to shut down over spiraling costs, debt
· Toronto Sun
Spirit Airlines, the budget American flyer that has struggled financially in recent years due to rising costs, could shut down as soon as Saturday if a U.S. government bailout is not put forward at the last minute.
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Negotiations between the airline and government stalled Friday over a $500-million aid package after bondholders were not happy with terms of the deal, reports CBS News .
The airline, which could file for bankruptcy for the third time since November 2024, has been on shaky financial ground since the COVID-19 pandemic in 2020. That is due to rising operating costs, including skyrocketing jet fuel prices over the past month, and growing debt.
President Donald Trump was asked about an 11th hour government bailout on Friday afternoon before he flew from Washington, D.C., to Florida.
Trump wants a ‘good deal’
“Well, I guess we’re looking at it,” Trump told reporters. “If we can do it, we’ll do it but only if it’s a good deal.”
The Trump administration was told that the airline was preparing to shut down within the next 24 hours.
“I’d like to save the jobs, but we’ll have an announcement some time (Friday),” Trump said. “We gave them a final proposal.”
Sources told CBS News that the Florida-based company is maintaining operations and completing flights for now.
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“Spirit is operating as usual,” a spokesperson said, declining to comment about the bailout negotiations.
CBS News previously reported the airline only has enough cash for a few more days.
On April 23, a lawyer representing Spirit Airlines said at a bankruptcy hearing that cash is needed to keep the company operating.
“The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer,” Marshall Huebner told the hearing, reports CNBC .
“So either new financing, either or both of new financing or access to almost $240 million of restricted cash, is absolutely essential. Round about, no later than the end of next week.”
Money locked up in bankruptcy loan
Huebner said “several hundred million dollars” of the company’s money is “locked away and inaccessible” under its previous bankruptcy loan terms, adding that other funds are in separate accounts for payroll and tax payments.
“Spirit now definitively stands at the crossroads,” Huebner said.
Several major airlines are prepared to help Spirit Airlines customers in the event the company shuts down over the weekend, reports Axios .
Spirit Airlines operates in more than 40 cities in the U.S. as well as destinations in the Caribbean and Latin America.