Two months after announcing a creditor restructuring deal, negotiations for a $500 million U.S. government bailout of Spirit Airlines have stalled due to creditor objections and bipartisan backlash. Still in Chapter 11 proceedings despite plans to exit by late spring, the airline reports cash for only days and has postponed a key hearing. Flights continue normally.
Spirit Airlines, facing soaring jet fuel prices from the war in Iran, is urgently seeking a $500 million bailout from the Trump administration as its bankruptcy proceedings drag on. This comes after a February 25 restructuring agreement with creditors aimed at slashing debt from $7.4 billion to $2.1 billion and exiting Chapter 11 by late spring or early summer—a timeline now in jeopardy.
The proposed bailout includes government-backed loans and warrants, potentially granting Washington up to 90% equity post-bankruptcy. President Trump called Spirit's assets 'good aircraft' that could be sold profitably once oil prices fall, per AP News. White House spokesperson Kush Desai noted reviews to save jobs and routes, though details are speculative.
Reuters reports the postponement of a Thursday, April 30, 2026, bankruptcy hearing due to ongoing talks and no financing motion filed. Lenders like Citadel object to terms devaluing their claims. Spirit's attorney warned of needing new funds or $240 million cash access to avoid liquidation, risking 17,000 jobs. Transportation Secretary Sean Duffy said Congress may need to approve funds.
Separately, the Association of Value Airlines seeks $2.5 billion for budget carriers like Frontier and Allegiant. Critics like United CEO Scott Kirby call Spirit's model flawed. Spirit confirms normal operations, with tickets and schedules intact as of April 30.
