Spirit Airlines To Reportedly Cease Operations As $500M Rescue Deal Collapses: Here’s What Happened

• A deal would have potentially led to a cash injection in exchange for warrants, giving the government a stake of up to 90% in the airline company.
• With the deal out of the picture, the airline is moving ahead with plans to liquidate its aircraft fleet and shut down, the report stated.
• Spirit Airlines had filed for Chapter 11 bankruptcy twice in less than a year—first in November 2024, and then last year in August.

Spirit Airlines may have to shut shop after its bid for $500 million in aid from the Trump administration fell through, according to a report by The Wall Street Journal on Friday.

The budget airliner has not received enough support from certain bondholders and the government to secure funding for its operations, the report stated.

Spirit had been negotiating with the Trump administration on a deal that would have injected cash in exchange for warrants, potentially giving the government a stake of up to 90% in the airline company, people familiar with the matter told The Wall Street Journal.

However, disagreements within the Trump administration over whether and how to fund the bailout emerged, and not all Spirit bondholders supported the terms, it added.

With the deal out of the picture, the airline is moving ahead with plans to liquidate its aircraft fleet and shut down, the report noted.

Trump On Spirit: ‘Maybe The Federal Government Should Help That One Out’

In an April interview with CNBC, President Trump had indicated potential government support for the airline. “Spirit’s in trouble, and I’d love somebody to buy Spirit. It’s 14,000 jobs, and maybe the federal government should help that one out,” Trump said.

In another report, it was also stated that President Trump had discussions with Commerce Secretary Howard Lutnick and Transportation Secretary Sean Duffy to work out a deal.

Meanwhile, American Airlines Chief Executive Officer Robert Isom, in an interview with CNBC, said that the company was not interested in Spirit Airlines and that the two companies' business models were not compatible.

In an interview with The New York Times, United CEO Scott Kirby also expressed skepticism about merging with smaller airlines. 

Spirit’s Chapter 11 Bankruptcy Journey

Spirit Airlines had filed for Chapter 11 bankruptcy twice in less than a year—first in November 2024, and then last year in August.

Before the first bankruptcy, Spirit faced mounting losses due to the COVID-19 pandemic. It also saw a failed merger with JetBlue in March 2024 after a federal judge blocked the deal on antitrust grounds.

The company emerged months later under a new parent entity, Spirit Aviation Holdings, but high lease costs and debts pushed Spirit back to bankruptcy last year in August.

Spirit's stock, which trades under the ticker FLYYQ on the over-the-counter market, has declined more than 60% on Friday.

How Did Retail Traders React?

On Stocktwits, retail sentiment surrounding the stock is ‘bullish’ amid ‘extremely high’ message volumes.

JETS ETF has declined over 8% year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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