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“We’re thinking about doing it, helping them out, meaning bailing them out, or buying it,” Trump told reporters in the Oval Office on Thursday.
“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,” Trump said.
The White House and major bondholders either didn’t immediately comment or declined to comment on the matter.
Trump told reporters that “when the price of oil goes down,” the government could “sell [Spirit] for a profit.”
Spirit expected to emerge from bankruptcy mid-year, but that was before the U.S.-Israel attacks on Iran led to a surge in jet fuel costs. Spirit had a nearly $28.3 million operating loss in February, according to a court filing, which was before the fuel price spike hit carriers — and travelers’ wallets.
Spirit, the iconic budget carrier known for its bright yellow planes and bare-bones service that became a punchline for late-night comedians, has struggled to survive. The industry’s costs ballooned after Covid, as customer tastes changed for more upmarket offerings and international destinations.
Spirit has aggressively axed its costs, selling aircraft and shrinking its network. Last May, Spirit operated 19,575 flights, according to aviation data-firm Cirium. This May, it’s operating 9,353.
“Spirit Airlines would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue,” a White House spokesman said by email. “The Trump administration continues to monitor the situation and overall health of the U.S. aviation industry that millions of Americans rely on every day for essential travel and their livelihoods.”
Will others follow suit?
Some industry members and analysts have suggested other airlines, especially low-cost carriers, could seek similar assistance from the government.
Low-cost airlines met with Transportation Secretary Sean Duffy earlier this week to discuss the current surge in fuel costs, people familiar with the matter told CNBC.
The Trump administration has taken stakes in companies it views as a national security interest, while companies from automakers to banks to the airline industry as a whole have received bailouts in the past, but it’s highly unusual that the government would rescue a single company.
Delta Air Lines and United Airlines account for most of the airline industry’s profit in the U.S., spending years and billions of dollars to successfully court a less-price sensitive clientele that is willing to pay up for roomier seats and other perks, as well as broad international networks. Many other carriers, including Spirit, have tried to catch up in recent years.
“We wonder if a potential Spirit deal could become a facility of last resort that other challenged carriers could seek in the future,” Barclays analyst Brandon Brandon Oglenski said in a note Thursday.
Possible deal
The terms of a tentative deal are for a $500 million loan that could eventually give the government a 90% stake in the Florida-based carrier, people familiar with the matter told CNBC. The potential plan would also put the government ahead of other investors, the people said, requesting anonymity to talk about the terms.
A U.S. bankruptcy court hearing to discuss the possible deal could be set for as early as Monday, according to comments in court on Thursday.
Mike Stamer, an Akin attorney who represents bondholders in the bankruptcy case, confirmed in court Thursday that “we did, in fact, receive a copy of the term sheet” for the potential deal with a loan from the U.S. government, a sign of how advanced the talks are.
The deal would also allow the U.S. government to select a board member, a person familiar with the potential terms told CNBC.
Spirit’s labor unions are also pushing for a deal.
“Any assertion that Spirit should just liquidate is only going to harm workers, passengers, and further strain our economy,” the Association of Flight Attendants-CWA said Thursday. “It’s unnecessary and mean spirited – when just a little help can stave off massive harm.”
Spirit’s lawyer, Marshall Huebner of Davis Polk, said in bankruptcy court Thursday that the loan would help Spirit get to “standalone fighting shape” but could also set it up for a potential merger.
Acquisition talks have failed before, however, most recently, with Frontier Airlines, which originally planned to merge with Spirit until a surprise all-cash offer by JetBlue.
Spirit’s challenges might also not go away, said Conor Cunningham, Melius Research airline analyst.
“How deep does he want to go?” he said of Trump and the possible rescue deal. “$500 million is probably not enough.”
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