Why the U.S. government’s $500 million bailout plan for Spirit Airlines collapsed

Sun, 03 May 2026 10:20:00 +0200

The Wall Street Journal recounts how a proposed $500 million lifeline from the Trump administration to struggling low‑cost carrier Spirit Airlines fell apart, leaving the airline on the brink of shutting down. After months of negotiations led by Commerce Secretary Howard Lutnick, the plan to extend government‑backed financing in exchange for warrants that could give the U.S. government up to a 90% stake in Spirit failed because key bondholders backed liquidation over the bailout terms. Spirit CEO Dave Davis and Lutnick concluded in a brief phone call that the airline had run out of viable options, prompting Spirit to begin winding down operations and canceling flights.

The article traces how Spirit’s path out of bankruptcy became increasingly precarious as surging jet‑fuel prices, geopolitical tensions, and pressure from creditors pushed the company toward a potential liquidation. The failed rescue deal highlights internal divisions among creditors, with some investors preferring to s