Talks to bail out Spirit Airlines stall as company teeters toward collapse

Spirit Airlines only has enough available cash to continue operations for a matter of days, not weeks, and talks for a government-backed rescue of the no-frills carrier have stalled, according to multiple sources familiar with the discussions.

Facing two bankruptcies since 2024 and rising fuel prices due to the Iran war, Spirit has sought a lifeline from the federal government. 

The Trump administration has offered to come to the airline’s aid, weighing a deal in which the government would lend Spirit $500 million in exchange for the right to take control of 90% of the company, CBS News has previously reported.

But the deal — which would make the government the senior bondholder, meaning it would get paid back before others — won’t happen unless Spirit’s creditors sign off.

Some of Spirit bondholders continue to balk at a government deal, sources said.

Ken Griffin’s Citadel submitted a counterproposal, but it was rejected by the government. 

Two other creditors — Ares Management Corp. and Cyrus Capital — are also opposed to the government plan, two U.S. officials told CBS News.

A bankruptcy hearing planned for Thursday was postponed, according to a Wednesday court filing that noted conversations on the government bailout package are continuing. 

Last week, it was revealed in a bankruptcy court hearing that Spirit skipped an interest payment, which could put the airline in default on its debtor-in-possession agreement with creditors. The creditors have not delivered notice that they plan to enforce a default, according to a Thursday court filing. Spirit has $250 million in cash, but creditors have a lien on it. 

President Trump has said he is open to a government takeover of Spirit “for the right price,” arguing the move could save thousands of jobs and telling reporters the airline has “some good aircraft” and “some good assets.”

The Trump administration is considering invoking the Defense Production Act’s emergency powers to extend a loan to Spirit, CBS News was first to report last week. 

The airline’s excess capacity would then be used for military operations like transporting troops and cargo. The company would then likely be sold to another airline when it emerges from bankruptcy.

Trump administration spokespeople and representatives for Spirit Airlines didn’t immediately respond to CBS News’ requests for comment Wednesday.