Spirit Airlines prepares to shut down as rescue deal falls apart

Spirit is expected to cease operations around 3 a.m. ET Saturday.

Spirit Airlines is preparing to shut down.

The ailing budget airline had been hoping to finalize a $500 million lifeline from the government before running out of cash. The discount carrier hasn’t been able to get sufficient support between certain bondholders and the government to secure the funding to keep it in business, people familiar with the matter said.

Spirit is currently expected to cease operations around 3 a.m. ET Saturday.

Spirit had been in talks with the Trump administration about a deal that would have provided a cash infusion in exchange for warrants that could convert into a stake of up to 90% of the company.But there had been disagreements inside the Trump administration over whether and how to fund the bailout. And some Spirit bondholders dug in their heels against the deal, convinced it would have hurt them economically, the people said. Meanwhile, the airline is facing relentless cost pressure from higher fuel prices.

Trump told reporters at the White House Friday that though he would like to have the chance at saving Spirit’s jobs, he would only agree to a deal with the company if it “was a good deal.” He said that if Spirit agreed to the administration’s offer, the bondholders wouldn’t be a top priority for the airline.

“If we can help them, we will. But we have to come first. We’re first,” Trump said.

Absent the government bailout, Spirit has been running out of cash, and the airline is moving ahead with plans to wind down operations and liquidate its aircraft fleet, the people said.

Spirit has spent much of the past year and a half in chapter 11. The business model that once made it an industry maverick—bringing its brand of bargain basement fares coupled with fees for pretty much everything—faced pressure from more intense competition. The airline buckled after years of losses and a heavy debt load.

It retrenched in recent months. The airline still has thousands of employees, but shrunk its fleet to focus on operations in strongholds such as Detroit, Orlando and Fort Lauderdale. As of February, Spirit accounted for about 3.9% of domestic air travel, according to aviation-analytics company Cirium, down from 5.1% a year earlier.

Spirit has continued to sell tickets in recent days as it worked to stave off its demise, including offers of deeply discounted fares.

Passengers wait in line in front of a Spirit Airlines ticket counter at Orlando International Airport in Florida in 2002.

Other carriers have been preparing to pick up customers that Spirit no longer serves. American Airlines has implemented fare caps for economy tickets on nonstop routes that overlap with Spirit and United is preparing to support Spirit customers and employees in the event of a shutdown, the companies said Friday.

Spirit helped bring the ultradiscounter model to the U.S. in 2006, mimicking the strategy Ryanair had adopted in Europe. At first, Americans were outraged at being nickel-and-dimed for water and paper boarding passes. But they couldn’t deny the allure of cheap tickets.

Less than half a decade ago, Spirit was at the center of a bidding war between Frontier and JetBlue. It went with JetBlue’s higher offer and agreed to be acquired in a $3.8 billion deal.

But the merger never got off the ground. The Justice Department challenged the deal, arguing that an independent Spirit was better for competition and cost-conscious fliers. A federal judge agreed in 2024, blocking the deal.

Spirit since then has struggled to find a path forward on its own. The company filed for chapter 11 last August, several months after exiting a prior bankruptcy. Since then, it has been streamlining its operations, selling planes and raising airfares in hopes of emerging as a leaner competitor.

A Spirit Airlines aircraft at an Airbus facility in Mobile, Ala.

The company’s challenges deepened with the onset of the U.S.-Iran war, which led jet fuel prices to double over a matter of weeks. That upended the agreement Spirit struck with creditors to emerge from bankruptcy.

Write to Alexander Gladstone at [email protected], Brian Schwartz at [email protected] and Alison Sider at [email protected]