The Trump administration is reportedly working on a deal to provide Spirit Airlines with up to $500 million in government-backed financing, in exchange for warrants that could give the U.S. government a significant ownership stake in the carrier. Folks, I’ve got one word to describe this: illegal.
Trump Administration Nears $500 Million Bailout For Spirit Airlines
Per The WSJ, the discussions involve both the Department of Transportation and Department of Commerce and are not yet finalized, but President Trump has already made clear he does not want to see Spirit fail, citing the roughly 14,000 jobs tied to the airline.
This comes just a day after Transportation Secretary Sean Duffy appeared to downplay the idea of major airline consolidation, suggesting that changes in the industry should still align with antitrust principles.
“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. And so would we just forestall the inevitable and then own that? Or does Spirit have some pathway to make it and I don’t know the answer to that.”
That makes this even more interesting.
On the one hand, the administration is signaling caution about mergers. On the other hand, it appears increasingly willing to step in directly to keep a failing airline alive thanks to an apparent edict by Trump himself.
> Read More: Trump Floats Bailout For Bankrupt Spirit Airlines And Hopes For A Buyer
The U.S. government has supported airlines before, most notably after 9/11 and during the pandemic.
But those were broad-based interventions during unprecedented national crisies. This would be a targeted bailout of a single airline that is struggling not because of a one-time shock, but because of structural issues in its business model.
Spirit has now filed for bankruptcy twice in less than a year. It is burdened by debt, rising costs, and a model that seems unable to cope with spiraling fuel prices.
This Is Not Legal!
The most important part of this discussion is that, at least for now, there is no legal basis for this bailout.
During the pandemic, airline aid came from Congress through the CARES Act. That provided clear statutory authority for grants and loans across the entire industry. The executive branch was implementing a program that lawmakers had explicitly authorized, which is not what is happening here.
But as VFTW notes, there is no comparable congressional authorization to hand a half-billion-dollar loan to a single airline simply because it is struggling. This is not a national emergency program…on what basis?
If the administration is using existing lending authority, the question becomes whether that authority actually extends to propping up an insolvent airline that private markets have already rejected (exactly the point Duffy made). Government loan programs are generally designed to address liquidity issues, not to rescue companies with fundamentally broken business models.
Spirit is not just facing a temporary cash crunch. It has already filed for bankruptcy twice in less than a year. Creditors have been circling and a liquidation has been openly discussed. It appears to me a bailout just delays the inevitable…to the detriment of every U.S. taxpayer.
There is also the issue of fairness. Why Spirit and not another struggling carrier? Without a clear statutory framework, this is (the latest) blatant example government picking winners and losers in the marketplace.
Taking warrants in exchange for a loan gives the government an ownership stake. That starts to blur the line between lender and shareholder, raising further questions about whether the executive branch has the authority to effectively nationalize part of a private airline without congressional approval and also then how it will fairly regulate an airline it owns.
CONCLUSION
If finalized, this would mark a remarkable shift in U.S. aviation policy….and (hopefully) promptly be declared illegal.
The Trump administration appears willing to step in not just to stabilize the airline industry, but to rescue a single struggling carrier. But how far is the government willing to go to keep it alive?
This may be framed as protecting jobs, but it also risks setting a precedent that failing airlines can turn to Washington for a lifeline for anything and everything…that’s a raw deal for taxpayers.
“and (hopefully) promptly be declared illegal”
I agree. But I am left to wonder who would have standing to challenge the action.
I would hope a Member of Congress asserting the power of the purse?
Ken Watanabe: “Let Them Fight!”
For real, Congress should re-assert its power of the purse, instead of deferring to Trump-Putin like the State Duma.
Generally individual members of Congress would lack standing. One of the two houses of Congress would have it. Both are currently controlled by the same party as the White House.
The best bet for standing seems to be a party that can demonstrate direct injury. Frontier or JetBlue could argue that an unlawful federal bailout preserves Spirit capacity that otherwise would exit the market. That hurts fares and takes away opportunities for them to access assets that would have been liquidated.
If other creditors could plausibly asset that their recovery would likely be greater in a liquidation than through ongoing operations supported by this government bailout, they’d presumably have standing as well.
Well, the power of the purse would be the basis on the merits. But I do not see any member of congress having any more a concrete, particularized, injury in fact than you or I have as identified in Lujan v. Defenders of Wildlife (being upset is certainly not enough). See also Raines v. Byrd (members of congress have no particularized standing to challenge executive branch actions). Some, like Spirit employees, are impacted, but not “injured”. I truly struggle to think who might have adequate injury to satisfy the standing requirement.
Perhaps a competitor airline might have standing, but which among them would initiate a lawsuit which might bring the administration’s ire?
I do not like it, but standing may be a real issue here.
Matthew, I admire your fortitude. In my experience, and esp. with the current lot of somnambulistic dough heads occupying WA DC, I’ve concluded that, “Hope springs ephemeral…”
It seems to me they’re too busy perfect the art of rolling over and playing dead, Matthew…
Trump is wrong on this one but someone needs to save Spirit. We all lose if they just get liquidated and other airlines have to start dealing with a certain segment of their customers base.
I’m not looking forward to paying more for airfare, but if Spirit cannot make money in the best of times, it’s a business model that simply has run its course, no?
Is $500 million enough to convert to a more traditional model like southwest is doing?
Theoretically if someone buys them cheap enough, eliminating much of the debt and makes some upward adjustments to pricing and fees they could survive. I still believe there is enough of a market for a low cost carrier and the majors going after that customer with BE fares shows it.
Now making that model profitable is another story but yes, inevitably prices will go up for all of us if they and Frontier go away.
No one needs to save Spirit. Of course, you’re MAGA trailer trash, so Spirit is probably the only airline you can afford.
Maybe if the Jet Blue merger had not been denied……
“Crap squared” someone once described that proposal as…
We don’t all loose if they are liquidated. If Spirit liquidates it certainly would help out Frontier, Avelo, Breeze, Allegiant heck maybe even JetBlue.
In my opinion the biggest winner if Spirit liquidates is Frontier they get to step fully into the space vacated by Sprit. I would hope Frontier would be able to purchase some of Spirits assets and use them to bolster its position within the US aviation industry.
Letting Spirit liquidate doesn’t spell the end of the ULCC industry in this country it might just help it.
It’s illegal. And irresponsible. And stupid. And will be a disaster.
So of course, they’ll do it. That’s how this mafia goonsquad regime rolls.
Release the Epstein files.
I’m kind of with Matthew on this one. Having Spirit still in business is beneficial to consumers for a variety of reasons, but at this point, can it survive under it’s current business model, bailout or no bailout? It seems like this is just postponing the inevitable.
Trump is also considering giving money to the UAE for their losses from his war. In the end, it’s the family crypto currency business that would benefit. As he wants to be the deal maker let him privately fund Spirit with with somebody else’s money that could turn the airline around.
Spirit will have to file a motion in bankruptcy court to approve any financing. The judge overseeing the case is as good as it gets. Let’s see what happens.
Mhm. Judge Lane, SDNY, 1 Bowling Green (beautiful building downtown; built 1907, Alexander Hamilton U.S. Customs House). Upcoming hearings on 4/23 & 27.
Well, what will happen if the current crisis in the Middle East drags on and one or more other U.S. airlines find themselves in the same situation as NK? That is the essential question!
Is there a source for Spirit having 14,000 employees that isnt just Trump babbling? Their 10-K filing lists 7,482 active employees at 12/31/2025, down from 11,331 employees at 12/31/2024.
Well the government bailed out Chrysler back in the day. Not sure who benefited though.
The main point of difference being that the Congress passed the 2008 bill that effectively authorised the bailout expenditure, while in this case it’s the President acting unilaterally. That’s not how it works; but hey, it’s only the Constitution, right?
“Laissez-faire capitalism”
@Raul Hernandez
Government stake? So much for being against the “socialists.” MAKE AMERICA GULLIBLE AGAIN!
And why not? The rubes already fell for all the following B.S. repeated countless times on the campaign trail:
Lower food prices immediately? FAIL.
Energy prices cut in half within one year? FAIL.
Lower gas prices? FAIL.
Higher stock market? FAIL
Higher consumer confidence? FAIL
More manufacturing jobs? FAIL
Peace in Israel/Gaza before the inauguration? FAIL
Peace in Ukraine on “Day One?” FAIL
No new regime change? FAIL
No new foreign wars? FAIL
The SP 500 had is highest close yesterday. I have no desire to defend Trump, but please get your facts right.
Everything of value Sprint has (planes, gates, parts, pilots, mechanics, and some staff) will be available to other airlines when Spirit folds. US carriers will certainly add new routes/frequencies to replace lost seats on Spirit. A business failure is not, in and of itself, desirable. But, a failure is a valuable economic event as it means resources being used inefficiently now have a chance to be used efficiently. Nearly every restaurant I eat at had one to many previous restaurants at that location. Sears, Wards, KMart, and (almost) Penney’s failures were good things in a big picture sense.
The Trump Shuttle lost $126 million, $309 million today, in the two years of Trump ownership. It is estimate he was on the hook for $35 million in debt guarantees ($86 million today).
Spirit wasn’t allowed to merge under a previous administration because that would be “anticompetitive”. It seems surprising he wouldn’t just let them fail and lay the blame on Biden. At least this time that blame seems like it would be warranted.
If Spirit fails, who’s gonna say “This one’s for you”?
At least one Trump big contributor owns Spirit debt.
I tried to look that up. Are you referring to Frank Holmes?