Trump Gives Spirit Final Rescue Proposal As Airline Prepares Shutdown

2026-05-02 04:17:31

(MENAFN- Khaleej Times) [Editor's Note: Follow Khaleej Times live blog for the latest regional developments with the US-Israel-Iran ceasefire now in effect.]

US 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 prepares to shut down without a last-minute deal.

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"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 that he expected an announcement later on Friday.

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Four people familiar with the matter confirmed a Wall Street Journal report that Spirit is preparing to cease operations as soon as 3 am on Saturday (7am GMT) after hitting an impasse in talks with some creditors on a $500 million government bailout plan.

A board meeting was under way on Friday after market hours to decide on the timing, though no final decision had been made, they said. Any shutdown would require board approval and would take place overnight rather than during the day, one of the people said.

If the shutdown is approved, the company would proceed with an orderly wind-down, halting flights overnight, repositioning aircraft for return and sending crews home, the person said.

“The Trump Administration made an extraordinary effort to try and save Spirit, but you can't breathe life into a corpse. Given that, the company should make its intentions clear for the sake of its customers and employees," a creditor close to the deal said.

A company spokesperson declined to comment on ongoing discussions and said Spirit is operating as usual.

The White House has reached out to other airlines to discuss how to accommodate people with Spirit tickets if the airline stops operating. United Airlines, American Airlines, Frontier Airlines and JetBlue said they were preparing to support Spirit customers if the rival shuts down.

American Airlines also said it has capped fares on routes where it competes with the budget carrier.

Association of Flight Attendants President Sara Nelson said Spirit's fate was in Trump's hands and a shutdown could cost nearly 20,000 jobs. "If you're in charge POTUS then make it happen now," she said on X.

Financing for equity

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

Sources later said that the administration had proposed $500 million in financing in exchange for warrants equivalent to 90 per cent 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. The carrier's demise would mark the industry's first casualty linked to the Iran war.

Spirit's volatile over-the-counter stock was last down 25 per cent on Friday.

Shares of rival Frontier Airlines rose 10%, while JetBlue Airways gained 4%. 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.