Spirit Airlines Cash Running Out As President Trump Mulls Bailout

As the federal government mulls a rescue package for the discount airline Spirit, a lawyer for the company says its on-hand funds won't last much longer, per CNBC. 

Trump Contemplates Spirit Bailout

On Thursday, President Donald Trump told reporters, “We’re thinking about doing it, helping them out, meaning bailing them out, or buying it.”

He then added that “when the price of oil goes down,” the government could turn around and "sell it for a profit." 

“I’d love to be able to save those jobs. I’d love to be able to save an airline. I like having a lot of airlines, so it’s competitive,” he said.

Propoposed Deal Includes Loans, 90% Stake, Board Member

The airline's lawyer, Marshall Huebner, didn't outline the deal, but CNBC said that people close to the situation said it was a $500 million loan and the government would receive a 90% stake. This deal would also allow the government to select a board member. 

“We are grateful for President Trump’s support and look forward to continuing to work with him and his Administration on a solution that protects thousands of jobs, preserves and enhances competition, and helps ensure Americans continue to have access to affordable fares,” Spirit’s CEO Dave Davis said in an emailed statement, per CNBC. 

Cash Shortage and Other Struggles Putting Spirit At Risk

According to Huebner, the company needs access to existing cash or new funding within the next few days to continue operations. 

“The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer,” he said. “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.”

This all comes after rumors that Spirit Airlines was on the brink of liquidation earlier this month. The company's problems were further exacerbated by the war in the Middle East, which drove up fuel prices. The company also filed for bankruptcy twice within a year. 

Not only that, but a deal in which JetBlue would acquire Spirit was blocked, and an engine recall made things more difficult. 

“Spirit now definitively stands at the crossroads,” Huebner said, with “several hundred million dollars” of the company’s cash “locked away and inaccessible” due to bankruptcy loan terms. Meanwhile, other funds are in separate accounts for payroll and taxes. 

Huebner also said that more financing would “create an appropriately capitalized, fierce competitor in the airline space” as a stand-alone carrier, “but also potentially as the strongest player in what so many believe must happen next, consolidation in the value carrier space,” leaving things open to a potential merger.