Spirit Airlines prepares to shut down without a government bailout

Spirit Airlines, the Florida-based carrier that helped popularize low-cost airfare in the U.S., could shut down operations if a deal isn’t reached soon with the Trump administration.

Several media outlets including Bloomberg and the Wall Street Journal reported Friday that Spirit is preparing to shutter, citing people familiar with the situation.

The airline has been in talks with the U.S. government to secure a $500-million cash infusion in exchange for a majority stake in the company. Negotiations hit a wall in recent days amid disagreements within the Trump administration and opposition from Spirit bondholders, the Wall Street Journal reported.

Trump told reporters at the White House on Friday that he made Spirit Aviation Holdings a “final proposal” and more news was likely to follow.

“If we can do it, we’d do it, but only if it’s a good deal,” Trump said.

A spokesperson for Spirit declined to comment on ongoing discussions and told The Times the airline is operating as usual.

An association of budget airlines asked the U.S. government for $2.5 billion in relief as the conflict in Iran drives up the price of jet fuel and puts pressure on cash-strapped carriers.

The cost of jet fuel has doubled since the start of the war, and airlines across the industry are struggling to adapt, with many cutting routes and adding baggage surcharges. Budget airlines have especially thin margins and cannot afford to spend more on fuel, experts said.

United Airlines Chief Executive Scott Kirby said that some airlines might not survive if the war in Iran continued. Kirby said his company faces an $11-billion loss if oil prices remain high.

International airlines, including Lufthansa and Air Canada, have slashed significant portions of their summer schedules as jet fuel costs rise.

Jet fuel accounts for about a third of an airline’s operating cost, according to experts. Low-cost carriers rely on high customer volume to turn a profit, which has become harder to come by as the war dampens travel demand.

Spirit grew quickly in the early 2000s, paving the way for other budget carriers such as Frontier to offer low-cost tickets with countless paid add-on options for seats and in-flight beverages.

In 2022, Spirit agreed to be acquired by New York-based airline JetBlue, but the merger was eventually blocked in 2024 by a federal judge who said the deal would be bad for competition.