Trump administration in advanced talks for Spirit Airlines rescue
The Trump administration is in advanced talks for a financing package as Spirit Airlines faces the risk of liquidation, according to a source familiar with the matter.
Iconic discount store Spirit has been facing challenges for years due to rising costs, changing consumer tastes, engine recalls and court blocking of its purchase. JetBlue Airlines two years ago.
“Spirit Airlines would be on a much stronger financial footing if the Biden administration had not recklessly blocked the airline’s merger with JetBlue,” White House spokesman Kush Desai told CNBC. he said. “The Trump administration continues to monitor the status and overall health of the U.S. aviation industry, which millions of Americans rely on every day for essential travel and livelihoods.”
Spirit is potentially facing imminent liquidation, people familiar with the matter told CNBC last week, speaking on condition of anonymity to discuss matters not yet publicly disclosed. The Dania Beach, Florida-based carrier filed for its second Chapter 11 bankruptcy in less than a year in August after struggling to increase revenue to cover rising costs.
President Donald Trump hinted at potential government aid Tuesday on CNBC’s “Squawk Box,” saying, “Spirit is in trouble and I would like to see someone buy Spirit. That’s 14,000 jobs and maybe the federal government should help with that.”
The terms of the negotiations are not yet clear and the deal could still fall apart. Wall Street Magazine It was previously reported that the talks were at an advanced stage.
“We hope the government will recognize the need for emergency funds, especially in the current economic environment,” a spokesperson for the Associated of Flight Attendants-CWA, which represents Spirit’s cabin crew, said in a statement. he said. “The last thing our economy needs is tens of thousands more people out of work, and the last thing the traveling public needs is fewer options in air travel.”
The US airline industry has accepted more than $50 billion in taxpayer aid to weather the Covid-19 pandemic, still the biggest crisis in its history, but those funds have not been awarded to any specific airline. Some aid to the US government stock warrants for airlines.
Airlines also received bailouts from the government after the terrorist attacks on September 11, 2001, but that money belonged to more than one company. The US also bailed out the automotive industry during the financial crisis in 2008-2009 and bought shares from manufacturers.
The Trump administration bought shares of some companies it deemed critical to national security. Intel And USA Rare Earthbut the Spirit stands out because it is in bankruptcy.
In February, Spirit announced it expected to emerge from bankruptcy in late spring or early summer, telling a U.S. court it would shrink and focus its planes on high-demand routes and travel periods. Pilot and flight attendant unions had also made concessions, including furloughs, in recent months to help Spirit survive.
But jet fuel prices have nearly doubled in some parts of the U.S. since then, further exacerbating challenges for Spirit and other airline industries.
As a low-fare airline that also competes with larger carriers with their own no-frills, basic economy offerings, it has become difficult for Spirit to cover expenses. Spirit had offered seats with extra legroom and other premium options to appeal to higher-spending customers.
