Topline
Uncle Sam is reportedly nearing a bailout deal with Spirit Airlines that would give the government a potential stake in the beleaguered and bankrupt budget airline.
Spirit Airlines, currently in Chapter 11 bankruptcy, is reportedly nearing a bailout deal with the U.S. government.
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Timeline
The last year Spirit Airlines was profitable, with a reported net income of $335 million.
Budget rival carrier Frontier Airlines and Spirit announce a merger, valuing Spirit at around $2.9 billion.
JetBlue Airways submits a rival all-cash proposal for roughly $3.7 billion. Spirit’s board deems it not “reasonably capable of closing” due to antitrust regulations.
Frontier and JetBlue sweeten their respective offers, with significant break-up fees should their deals fail. Spirit’s board continues recommending Frontier’s plan over JetBlue’s.
Despite its board’s preference, Spirit’s shareholders vote for the more lucrative JetBlue offer. Spirit ends its merger agreement with Frontier and signs with JetBlue.
The Justice Department sues to block the JetBlue-Spirit merger, saying it would reduce competition and likely lead to higher fares.
JetBlue and Spirit terminate the merger agreement. JetBlue pays Spirit a $69 million termination fee as stipulated in the contract, separate from the approximately $425 million in pre-payments already made to Spirit shareholders.
Spirit files for bankruptcy. The airline is delisted from the New York Stock Exchange, its stock plunging 94% since the beginning of the year.
Spirit enters a Debtor-in-Possession (DIP) financing agreement with bondholders, securing about $300 million to fund operations and restructuring through bankruptcy.
Frontier offers another merger deal including $400 million in new debt and a 19% stake in Frontier stock for Spirit’s creditors. Spirit rejects the offer as inferior to its restructuring plan.
Spirit rejects $2.2 billion offer from Frontier. A U.S. bankruptcy court affirms Spirit’s reorganization plan, a key milestone required to exit Chapter 11.
Spirit officially exits bankruptcy, having converted roughly $795 million of debt into equity and received a $350 million investment from investors.
Spirit reports a net loss of $245 million. Days later, the company files again for Chapter 11 (a rare “Chapter 22”) after warning in a Securities Exchange Commission filing that without more liquidity, there was “substantial doubt” it could survive another year.
The pilots union agrees to roughly $100 million in concessions over two years. Spirit secures an additional $100 million in DIP credit agreement funding to help sustain operations and fund restructuring efforts into 2026—but only receives $50 million up front.
Minneapolis-based investment firm Castlelake enters takeover talks. Spirit slims down fleet, recalls some furloughed workers, then reaches deal with creditors to exit bankruptcy while shedding more than $5 billion in debt.
Spirit files reorganization plan, aiming to exit Chapter 11 by early summer. But the war in Iran causes jet fuel prices to spike, which threatens restructuring plan.
Multiple news outlets report Spirit is on the verge of collapse.
News Peg
The Trump administration is negotiating a rescue deal for Spirit Airlines, The Wall Street Journal reported Wednesday. The U.S. government would loan Spirit $500 million in return for a stake in the company, according to those familiar with the deal. President Trump on Tuesday told CNBC he was concerned for the low-cost airline, saying, “Maybe the federal government should help that one out.” Neither Spirit Airlines, the Department of Transportation nor the Department of Commerce have responded to Forbes’ questions about the reported deal.
Highly Unusual Arrangement
The U.S. government is reportedly prepared to lend Spirit a half-billion dollars in exchange for stock warrants, which are securities that give the holder the right—but not the obligation—to purchase company shares at a specific price within a set timeframe, usually five to 10 years. This is not unheard of: The U.S. government provided temporary financial aid to the airline industry in the aftermath of 9/11 and again during the Covid-19 pandemic. In both instances, Congress passed legislation to act as a backstop lender, providing loans or payroll support grants to airlines in exchange for stock warrants. After major airlines received assistance under the CARES Act of 2020, for example, the government gradually sold its warrants back into the market as the industry recovered. It would be unprecedented for the government to step in to save a sole carrier or, as is reported, to potentially receive a significant equity stake in an airline as part of a rescue deal. “The question will be: can we do anything to save Spirit and make it viable, or would we be putting good money into a company that inevitably is going to be liquidated?” Transportation Secretary Sean Duffy told CBS News. “And that’s a decision that our teams look at and the president has to be briefed on and we’ll make a decision together.”
Further Reading
Spirit Airlines Strikes Deal To Exit Bankruptcy Later This Year—Parent Firm Shares Surge (Forbes)
