There’s a real possibility of Spirit Airlines shutting down after the government blocked its lifeline. That changes the moral math.
Spirit Was Told It Had To Survive Alone
Spirit Airlines had two serious suitors. Frontier wanted it. JetBlue wanted it more. JetBlue ultimately offered Spirit shareholders $33.50 per share in cash, a deal valued at $3.8 billion, and Spirit shareholders approved the merger in October 2022. This site covered every angle of the transaction because of its uniqueness and, at the time, limited airlines merger and acquisition deal flow. I held that Frontier was the better play before altering my opinion due to management that would helm either combined airline. The JetBlue option was ultimately better and was approved. Then the government stepped in.
The Department of Justice sued in March 2023, arguing that Spirit was not just another airline. It was the country’s largest and fastest-growing ultra-low-cost carrier, and its “Spirit Effect” forced fares lower across the market. To that extent, they were not wrong.
That part was true. Spirit was unique. It made air travel possible for people who otherwise could not afford it. But that uniqueness cuts both ways. If the government blocks Spirit from selling itself because the airline is too important to lose, then the government cannot shrug when the same airline later circles the drain.
The Government Bought This Problem When It Blocked The Deal
A federal judge blocked the JetBlue deal in January 2024, and JetBlue and Spirit terminated it in March after concluding approvals could not be secured before the deal deadline.
Spirit did not then become stronger. It filed bankruptcy, restructured, cut routes, reduced capacity, and still could not make the math work. Reports now describe Spirit as facing its second restructuring since 2025, with the Trump administration considering up to $500 million in financing and warrants that could give the government as much as 90% of the equity.
That is not free-market purity. That is government intervention on both ends. The government cannot pick winners and losers, but that’s exactly what it did. It fought a free-market deal when one of the carriers made it clear it had doubts about its solvency. It then chose winners in Alaska and Hawaiian Airlines, allowing the two to merge with almost no notes, and it wasn’t unique to the traditional hub and spoke model. Under a new DOJ it also allowed Allegiant to acquire SunCountry, again, with virtually no asterisks to the deal. What’s interesting about that deal is that it was specifically in the space of the leisure market and discount carriers. So it’s not that just all discounters must remain independent, just Spirit.
There Is Precedent For A Bailout That Serves Taxpayers
I am not generally a bailout guy. Companies should be allowed to fail. Bad management, bad timing, and bad business models should have consequences.
But the auto rescue shows that government intervention can preserve jobs and value when the public interest is large enough. The Treasury says it invested about $80 billion through the auto program, and Reuters reported a study finding the bailout saved 1.5 million jobs and preserved $105.3 billion in tax collections.
The government did not fully profit on every auto investment, but it did preserve a major industrial ecosystem. Spirit is smaller, but the logic is similar. For $500 million, the government is not buying a vanity project. It is taking over hard-to-come-by aircraft, gates, operating certificates, jobs, competition, and a public-service fare discipline that the market may not replace.
Obviously, the money was not enough and rates have to increase. But almost everywhere else in the world is able to make a ULCC work. Europe is the global leader, but Asia is full of ULCCs too, Australia, Latin America, almost everywhere outside of Africa. Why is it impossible in America, by far the richest country in the world?
Amtrak Makes The Argument Harder To Dismiss
The US government already owns and supports national passenger transportation. Amtrak is federally chartered, the US DOT owns 100% of its preferred stock, and its financial statements are publicly audited.
Amtrak carried 34.5 million riders in FY2025 and generated more than $2.7 billion in ticket revenue, while still operating with government support. So why is rail a public necessity, but ultra-low-cost air service is not?
Brightline may eventually supplement private rail in selective corridors, but it is not a national replacement. Spirit, for all its flaws, provides something Amtrak cannot: quick distances for little money. For those at the bottom of the economic ladder who need quick transportation to visit a sick relative, Amtrak won’t fit the bill. Greyhound won’t solve the problem either.
The Assets Are Worth Something
Spirit leases its aircraft but there’s no question the leased assets are in demand. So are gates at Chicago O’Hare and elsewhere throughout the country. It runs (or did, I haven’t seen a story to the contrary) New York Laguardia’s Marine Terminal, the historic Art Deco home to Pan Am. Those gates, that terminal has value especially in a tight air market. Parts, maintenance facilities and equipment, and marketing lists are also worth something. Its trained pilots, staff, and mechanics are worth something. Spirit is worth something.
Perhaps the value is more of an auction value, but given all that they have, how much less than $500MM is the auction value of the carrier? Is it worth $300MM dead and $500MM alive? Bidders could settle that and one might have just stepped forward.
Conclusion
Generally, I am against government intervention. Businesses need to be permitted to fail, otherwise there is an incentive for profit with no consequence for poor performance. But the government meddled in this instance. It blocked a reasonable market merger because Spirit was supposedly too important to disappear. It said consumers needed Spirit. It said Spirit’s role was unique and it won that argument in court. The day the government filed its challenge, it bought Spirit for better or worse. You cannot say businesses should be allowed to fail, then also block them from succeeding. While there may have been job losses in a JetBlue-Spirit merger, it would have been far less than what will happen if it fails outright. There may have been price competition issues with the combined carrier, but Spirit’s absence altogether will be worse for consumers. It’s perfectly fine to say “no bail outs” but not if you block companies from avoiding the need for them in the first place.
What do you think?
Oh, so, blame Joe Biden? I donno, man. We can blame Trump for rising oil costs by doing a new forever war of choice on a whim. But, each ‘hot take’ is a bit too simplistic. Morally, I’d argue it is wise to bail-out Spirit to save those jobs, not screw-over passengers who would become unsecured creditors, and to maintain competition so that these ULCCs keep prices low for the overall critical transportations system in our country. Anyway, kinda up to the bankruptcy court now… seems like secured creditors like Citi would rather liquidate and get those aircraft instead. The bigger question, who are the insiders that’ll inevitably benefit from such a bailout, and do any of them have a direct connection to the President (because, recall, that level of corruption, usually, is uncouth.)
I mean one could argue your view is simplistic. ULCCs keep prices low at a price that is clearly unsustainable. There’s no value in providing low prices when your company can not survive on those prices.
The last DOJ position clearly overlooked the fact that spirit could not make money charging the fares that they wanted them to keep. No matter how you slice it you can’t charge so little that you can not make money.
The big boys (United, American, Delta) can offset those lower basic economy fares (that make up a slim portion of their cabin) with premium fares and credit card revenue. Small carriers, especially ULCCs with no true premium revenue or credit cards at a large enough scale can not offset those costs.
The ULCC model is dead, and people need to realize that or we are just going to continue doing this same song and dance until eventually everyone is gone and has caused irreparable harm to the other small carriers that are trying to survive.
@Greg – The ULCC model is dead? Ryan Air made 19x the profit of American Airlines. If it was a US carrier it would have placed third behind Delta and United – and that’s without a credit card. If credit card revenue was removed from consideration it would be the most profitable airlines in the world. Delta, for example, lost money if its relationship with AMEX was excluded and it’s the world’s most profitable carrier. EasyJet (also ULCC without a credit card) made more than Southwest, Alaska, and American combined. All three of those have significant credit card contracts too that lift the balance sheets in a way that neither Ryan Air nor EasyJet match. Allegiant (ULCC) made $70MM last year on $2.5bn in revenue including losses attributed to its Sunseeker Resort sale vs $111MM at American on $54bn. Delta made $6.8bn on $63bn in revenue but American Express was $8.2bn of that.
There’s an argument to be made that the ULCC is the only pure play profitable airline choice.
Kyle’s posts this weekend seem to run along the lines of something contrarian and clickbaity to try and mazimize comments.
I’m all for it. Support the site. Bah!
@Aaron – I believe everything I write which either makes me a lunatic, or one that differs from the same 20 articles all commenting with the same thoughts the same way. I try to use facts and evidence to support my opinions, but maybe I should just consider writing the 50th article that says “Spirit Could Run Out Of Cash This Week.” But I don’t want to read the 50th article on the same topic and approach, so why would I write it?
Aw, tbats nice. You keep soing you.
Thank you for writing this. People are overlooking your point and I didn’t even realize the Amtrak angle, a certain president’s favorite company. Blocking in 2022 seemed based on a bogus fantasy argument at the time and its’s clearer now.
Major difference between Amtrak (actual national rail service, essential for certain interstate regional markets like DC-NYC-BOS), and Brightline (which is intra-state, FL). Now, perhaps, some use Brightline to commute between Orlando and Miami, but ridership is nothing like the NE/Mid-Atlantic corridor. Probably more people use Tri-Rail in SoFla; though, most just drive.
Bailout = bad idea here
Can’t believe republicans would rescue a failed private enterprise with taxpayer money – but are there any left or are all signed-up on the MAGA express?
Did you read the article? It’s a valid point. The government broke it they should buy it.
The fundamental question here is no longer whether the government should save NK, but what to do in similar situations that are highly likely to arise in the near or distant future.
Comparing Spirit to amTrack is ridiculous. But as usual, Kyle, you have the worst takes in the most idiotic thought process. Sundays around here is like taking out the garbage.
@Belo – Do you have an alternative example of the US government stepping in for transportation in the US? Is this not a government-owned entity (as floated by members of the Trump administration that Spirit would be 90% or fully owned by the US in a bailout)?
Exactly! More clickbait.
Woah, no need for the ad hominems. We readers/commenters are all guests here. Even if you disagree with the host/author, you can do so respectfully and on-substance. Sheesh.
1. Spirit is not in trouble because the Biden DOJ blocked JetBlue from buying them. If JetBlue had been able to close, they’d be in a bigger hole, cutting even more flights and shedding aircraft and employees. As it is they’re trying to shrink to stem losses (JetBlue hasn’t made money in six years.)
2. They actually have ver y few assets. “there’s no question the leased assets are in demand. So are gates at Chicago O’Hare and elsewhere throughout the country” isn’t persuasive because (1) they have returned their newest planes to lessors, their planes and spare engines are in hock (2) they sold their o’hare gates to americn and united and that leaves them access just to common use gates. They have gates and slots at LaGuardia, access to Newark, and gates at Fort Lauderdale. For a brand new startup, they have an operating certificate and they employ the required 5 wise men. That’s really it.
3. Auto bailouts and Amtrak (and past airline bailouts) were provided for in law. This one has no plausible legal basis.
4. It makes the rest of the industry weaker. Frontier has been losing money, and Spirit is their primary ultra-low cost carrier competitor. JetBlue is their primary competitor in Fort Lauderdale.
5. Government money won’t last. Spirit lasted 5 months out of bankruptcy last time, and is still losing money. Every indication is they will continue to do so, blowing through the cash.
What Gary said…
but also. There was nothing stopping F9 from acquiring NK after the B6 deal fell through except… wait for it — Spirit Airlines — with a VERY inflated view of itself. The NK leadership is going to make a great business case model one day about how extremely poorly they represented shareholders and their own employees going through Chapter 11 twice
“WHY THE GOVERNMENT (MORALLY) HAS TO SAVE SPIRIT AIRLINES”
And the taxpayers have a “moral” obligation to save a failing business model? Spirit could’ve merged with Frontier but couldn’t get out of their own way to do so. The taxpayers have zero “moral” obligation to justify the judiciary. We have a VERY different view of what morality is, Kyle.
@MaxPower – I agree that Frontier could have done the deal after JetBlue fell apart, but the regulators just revealed that they would fight a merger with Spirit, so the risk there was probably higher than just settling on a price.
Spirit failed to do a deal that was on the table with Frontier in recent months, per Bill Franke. Very different antitrust situation!
@Gary Leff – Reports, if I recall, were that it was in the neighborhood of $400MM before legal costs. That’s $100MM off from this. Is it your contention that Spirit should have taken that deal? I’d agree it probably should have. Maybe the DOJ could make it clear that a Frontier deal wouldn’t face a challenge and then the taxpayers and those who hold employment at the carrier would be saved from calamity.
Kyle,
always a fun robust discussion on these topics. Thanks for having a thick skin and the responses.
Happy Sunday
@MaxPower – I appreciate the dialogue!
@Gary Leff – Line by line:
1) Agreed. The Biden DOJ (your words, not mine) could have let it complete and found the same position but on a larger scale, or not. No one knows, but we agree that the problems existed before the government put its thumbs on the scales.
2) I stated clearly that holding the aircraft themselves is the asset, not that they own the planes. I used O’Hare gate sales as a proxy to show that there is value in their gates in select airports and then specifically cited Laguardia. Two gates at O’Hare were worth $30MM, right? How much is the Marine terminal worth? Orlando gates have to be worth something, right?
3) Maybe. Was the legal basis of the auto bailout that it was essential to maintain the market? Because the DOJ already made that argument in court – and won. Other airline bailouts and Amtrak were all provided for in law but this one specific case is not?
4) I’m not sure I follow. Frontier losing money applies here, why? Allegiant-Sun Country was permitted to merge and made money in 2025. Are you saying there’s only room for one ULCC and the government gets to decide which one it is? Is there legal basis for that too?
5) We agree 100%, it’s almost as if they could have gained some size and market position they’d be more viable.
Woohoo, Gary! I’m loving this cross-blog Boarding-Area-affiliate interaction!
You can write to Congress (if you have voting representation…) and ask that they put together a bailout package for Spirit. That’s how all other bailout packages are secured, not by Presidential fiat.
Further, Amtrak seems like an apt analogy but a faulty one – the government gets to control Amtrak’s route network. It very likely could survive as a private enterprise but only in select areas like the Northeast Corridor. Currently Amtrak is required to serve routes like Chicago and New Orleans to LA because of political considerations, not economic ones. Same thing for the Postal Service, which could likely survive as a private, for-profit entity if it could choose which areas to service and how often. But again, every small town wants to preserve “their” post office.
No, the government didn’t buy this when they blocked the merger. The president did cause the final nail to be driven by high fuel costs that is affecting the whole industry.
@Asada Def – Higher fuel prices didn’t help (prior article published about this) but Spirit was in its second bankruptcy in a year before the war started.
This is like Alitalia. Italy broke EU competition law (and Brussels ignored it, because Italy isn’t a small member state) for decades, Alitalia was finally sold. Did Italian aviation collapse? Nope.
No doubt U.S. competition authorities have made mistakes. Probably the biggest was allowing the U.S. Airways/AA merger which absolutely hurt consumers. That bad experience rightfully led competition authorities to avoid similar mistakes.
USG has zero ability to run a competitive airline. I suspect the real reason behind the call for a bailout is not to protect Spirit airlines model (which has proven unworkable model) but rather to bail out the investment bankers and speculators who made the mistake of throwing good money after bad. This is a “socialize the losses” model.
@Marc – Except in Italy, there’s just one true flag carrier. The same in France, in Germany, in Spain, in Switzerland, in the Netherlands, etc. The Spirit model works both in the US, and in Europe. Allegiant was profitable and merged with Sun Country, Southwest before it became a traditional carrier had something like 39 quarters of profitability in a row as an LCC. Breeze is turning profit quickly (given its newness to the industry) as an LCC too.
I 100% agree we should not bail out companies that fail on their own. But if they try to save themselves and the government blocks them from solving the problem, they have already intervened. If they force Spirit both to go it alone when they say that it can’t make it AND they don’t bail it out when that’s proven true, then they picked winners and losers which the government can’t do. Why was Allegiant-Sun Country and Alaska-Hawaiian allowed to proceed without significant concessions let alone a legal challenge while Spirit and JetBlue are unable to see the same hands-off approach.
The morally correct stance is to let them fail. Their pilots and mechanics can get new jobs. Other airlines will use their planes, spare parts, and gates. Free enterprise is the best thing for all of us. It requires you let the inefficient fail. Biden’s administration was wrong to block the merger (though it likely would have not turned out well). The Trump administration is idiotic for considering a bailout.
Oh Donny boy’s interest is a lame attempt to claim he “tried to fix it” Political Theater. I do however believe there is value in Spirit, for an independent buyer willing to make changes.
@Maryland – I agree wholeheartedly.
Ok, Kyle this is quite the take. So I’m curious how you’d apply this policy elsewhere. As it seems to be if the government has any sort of intervention it must act to save jobs. With a secondary justification that if the intervention lowers prices, it increases the moral justification.
The example of the auto bailout basically says that the government intervention or lack thereof of regulating the financial markets caused a spillover that risked numerous jobs and customer choice.
So how big does a company have to be bailed out, morally?
Would a mom and pop store in a small town qualify when a Walmart comes to town? The government has written rules that benefit Walmart explicitly over small businesses and subsidizes Walmarts workforce through government assistance. If the government does intervene to bail out the mom and pop, how long should the support be? Should the government give a monopoly to that shop for specific items?
There are significant holes in your arguments around Amtrak and the auto companies. Amtrak has an inherent problem with capacity due to not owning tracks and the cost required to lay new track.
The auto companies seemed to be likely to be replaced with imports, thus shipping the jobs off shore. In the case of Spirit, this market would be consumed by us carriers so a portion of those jobs would be recreated at other us companies that have proven to be more efficient in providing services to customers. Since the jobs will be replaced by other us jobs, that argument is moot. Leaving customer choice. If it’s so important to maintain customer choice, where do we draw the line? Should the government have a company in every sector to protect consumer choice? I can’t imagine you’d support that.
At the end of the day, this feels like a feeble attempt to justify increasingly unjustifiable decisions by a government that chooses winners and losers on a daily basis entirely by their willingness to enrich our dear leader and his family.
@KB – As I mentioned in the post, if the government didn’t block Spirit’s attempts to save itself prior to bankruptcy, but the deal fell apart on its own and Spirit fell into bankruptcy and couldn’t exit, so be it. The government put its thumb on the scales when it was warned this could happen, it disregarded claims that it wasn’t viable alone and determined it was essential. Ok, well now it’s not viable on its own so it’s still essential, right?
This isn’t about being too big to fail – you’ve injected that into the argument. I’d rather the government stayed out of it entirely but it didn’t do that.
I’m confused on the comments. It doesn’t matter what side of the political spectrum you are on. Spirit troubles deal with the P&W engines. No bailout will fix that. Sprit ran into major issues when they purchased (leased) more aircraft with engines that could not support them. Let’s give them $2B, how does that help the 100 or so planes that they have, they will still have a very limited network. We can discuss their model, the failed merger and everything else, without having planes with engines to fly with, everything else is moot.
All of those aircraft with bad engines are gone. Spirit rejected those leases in the start of the second bankruptcy. So yes, the P&W debacle was a major factor driving them into this bankruptcy. It will not, however, be a major factor going forward. Spirit was poised to exit chapter 11 with an agreed plan of reorganization the bondholders supported. Skyrocketing fuel prices destroyed that plan. Now the government is mulling altering the reality it helped to create, both through blocking a merger of two small carriers under Biden and starting a war in the Middle East under Trump.
Most or all of the A320NEO aircraft awaiting engine work have been shed during the bankruptcy and Spirit still has no ability to make money or plan to do so in the near future. I think we can move on from blaming their current troubles on the PW1100G engines.
Socialism is bad, except when we help corporations and people close to our Leader. When poor people can’t afford food and rent, it’s their fault. When companies run out of money, it’s not their fault, and we should make taking care of them our priority as a society.