Spirit Airlines is moving toward a potential shutdown after negotiations over a $500 million rescue package with the Trump administration fell apart, according to a report released Friday.

The low-cost carrier has struggled to obtain sufficient financial backing from both the federal government and key bondholders needed to sustain operations, the Wall Street Journal reported, citing people familiar with the situation.

In recent discussions, Spirit had explored an arrangement with the Trump administration that would have given the government a controlling stake—up to 90%—in exchange for a significant cash infusion. Such a deal could have also enabled the White House to utilize parts of the airline’s fleet for military purposes, according to CBS News.

The proposed agreement, however, ran into significant resistance. Disagreements reportedly emerged within the administration over how to structure and finance the bailout, as well as whether to proceed at all, while some of Spirit’s bondholders opposed the plan entirely.

A spokesperson for Spirit declined to comment on “ongoing discussions.”

The White House did not immediately respond to a request for comment.

President Trump has previously indicated that he would prefer a private buyer to step in and acquire the struggling airline, though he has also suggested that government involvement remained a possibility, reflecting a willingness to consider federal intervention in the private sector.

At the same time, Spirit—like many airlines worldwide—has been grappling with sharply rising fuel costs amid the global energy disruption tied to the war with Iran.

As of April 30, jet fuel prices averaged $4.51 per gallon across major U.S. hubs including Chicago, Houston, Los Angeles, and New York, according to the Argus US Jet Fuel Index. That represents an 80% increase from the roughly $2.50 per gallon level seen in February before U.S.-Israeli strikes on Iran.

Airlines have responded by scaling back long-distance routes and rerouting flights away from conflict zones, both of which have increased fuel consumption and operational strain.

Spirit has already outlined plans to significantly downsize its operations, aiming to reduce its fleet to roughly one-third of its pre-bankruptcy size—about 76 to 80 aircraft—by the third quarter of 2026.

The Florida-based carrier, which filed for bankruptcy last summer for the second time in under a year, had based its recovery strategy on projections of lower fuel costs, estimating averages of $2.24 per gallon in 2026 and $2.14 in 2027, according to disclosures made in March.

United Airlines CEO Scott Kirby has expressed skepticism about the airline’s future, questioning whether even a government rescue would be sufficient.

He described Spirit as “an interesting experiment” that has “failed,” arguing that its underlying business model is fundamentally unsustainable and unlikely to generate enough revenue to cover operating expenses.

Spirit responded sharply on social media, defending its brand and customer appeal.

The airline said travelers value its low fares and offerings, adding that “Maybe that’s why United executives can’t stop yapping about us.”

Spirit is widely recognized for its bright yellow Airbus aircraft, deeply discounted base fares, and additional charges for services such as checked baggage and seat selection.

{Matzav.com}