Federal Government In Talks About Possible Aid For Spirit Airlines

Yesterday, President Donald Trump floated the idea of the federal government assisting the discount airline Spirit Airlines after rumors of a possible liquidation spread. 

“I don’t mind mergers. I think I’d love somebody to buy Spirit, as an example. You know, Spirit’s in trouble. ... Maybe the federal government should help that one out," said President Trump to CNBC's Squawk Box.

Now, it seems those talks to assist Spirit are happening, CNBC reports.

Government Aid Talks Taking Shape

According to CNBC, the deal would include $500 million in government financing, which could mean the government would have an equity stake in the carrier. CNBC also noted that "[t]he senior financing would put the government ahead of other stakeholders in the airline."

Spirit has been in dire straits over the last few seasons, from the courts blocking a deal in which they would've been acquired by JetBlue, to an engine recall, to filing for bankruptcy twice in a year, and now the war in the Middle East is causing jet fuel prices to climb.

In fact, the increase in fuel prices has prompted other airlines to find ways to offset those costs, such as raising checked-bag fees. 

Uncertainty Surrounding Spirit Remains

“Spirit Airlines would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue,” White House spokesman Kush Desai said to CNBC. “The Trump administration continues to monitor the situation and overall health of the U.S. aviation industry that millions of Americans rely on every day for essential travel and their livelihoods.”

CNBC notes that The Wall Street Journal initially reported the news. 

“We are hopeful that the government will recognize the needs for emergency funds especially in the current economic environment,” an Association of Flight Attendants-CWA, which represents Spirit’s cabin crews, spokesperson said in a statement. “The last thing our economy needs is tens of thousands more people out of work and the last thing the travelling public needs is fewer choices in air travel.”

There's no definitive deal in place, and Spirit declined to comment on the talks. 

“We are operating our business as normal; Guests can continue to book, travel and use tickets, credits and loyalty points as usual,” the airline said in a statement.

Transportation Secretary Speaks Out

In addition to President Trump, Transportation Secretary Sean Duffy commented on the airliner and appeared not to support helping Spirit. 

“What we don’t want to do is ‌put good money after bad, and there’s been a lot of money thrown at Spirit, ‌and they haven’t found their way into profitability,” Duffy said to Reuters. “And so would we just forestall the inevitable and then own that?”

“What would someone buy?” Duffy asked in the interview. “If no one else wants ⁠to buy them, why would we buy them?”

We'll see what President Trump and the federal government ultimately decide to do.