Shares in discount carrier Spirit Airlines’ parent, Spirit Aviation Holdings (FLYYQ), plunged by as much as 60% on Friday afternoon. This followed a report by The Wall Street Journal that a $500 billion rescue package for the bankrupt airline had fallen apart, forcing the company to prepare to shut down its operations.
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Rescue Package for Spirit Airlines Fails
The outlet cited people familiar with the matter for the report. The revelation comes about two weeks after reports indicated that President Donald Trump was finalizing a $500 million loan for the airline in exchange for warrants that could be exercised to give the U.S. government up to a 90% stake in the company.
However, Spirit Airlines was unable to either convince certain bondholders that such a plan would not be to their disadvantage or rally enough support among government officials who debated the government lifeline plan, the outlet said.
‘I’d Love to Be Able to Save an Airline’
The development comes despite Trump, in a recent meeting at the Oval Office, stating his interest to help bail out or buy out the struggling airline. “I’d love to be able to save an airline,” Trump said during the meeting. “You know, I like having a lot of airlines, so it’s competitive.”
Spirit Airlines is one of the biggest commercial airlines in the U.S., ranking among the top 10 in terms of annual passenger volume. However, the low-cost airline has come under pressure lately due to pressure from its bigger rivals.
The ongoing U.S.-Israel-Iran war — which is weighing heavily on airlines through soaring jet fuel costs that have pushed carriers to seek a $2.5 billion lifeline from the U.S. government — heaped more pressure on the budget airline. In August last year, the airline filed for bankruptcy protection after exiting just months earlier an initial bankruptcy filing entered in November 2024.
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