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(Bloomberg) — Spirit Aviation Holdings Inc. is winding down operations after the troubled US discount carrier buckled under the weight of surging fuel prices and a government bailout dangled by President Donald Trump fell through.
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All Spirit flights have been canceled and passengers have been advised not to go to the airport after the airline failed to secure a deal with the Trump administration for funding.
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“Sustaining the business required hundreds of millions of additional dollars of liquidity that Spirit simply does not have and could not procure,” said Dave Davis, Spirit’s chief executive officer, in a statement on Saturday. “This is tremendously disappointing and not the outcome any of us wanted.”
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The US government had been considering providing Spirit with $500 million in exchange for warrants to purchase up to 90% of the airline once it emerged from bankruptcy. But key creditors wouldn’t agree to the deal, which would have given the government higher priority than other lenders.
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Transportation Secretary Sean Duffy told reporters Saturday at Newark Liberty International Airport that the administration was “not surprised by what happened,” saying officials were prepared for the potential decisions Spirit would make.
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“In the end, this was a creditor issue,” he said. “They have the final say of whether they want to do a deal with the government.”
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As the government rescue hung in the balance, a group of lenders including Ken Griffin’s Citadel resisted terms they viewed as likely to impair their claims and recoveries, people familiar with the matter said this week. The group made a counterproposal, according to one of the people.
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Earlier Saturday, Duffy announced measures to support Spirit ticket holders and employees, and said several carriers including United Airlines Holdings Inc., Delta Air Lines Inc., American Airlines Group Inc., Southwest Airlines Co. and JetBlue Airways Corp. agreed to cap prices or reduce fares for customers impacted by the shutdown.
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“We’ve activated our airline partners to ensure passengers are not stranded, communities maintain route access, fares do not skyrocket, and Spirit’s workforce is connected to new job opportunities,” Duffy said in a statement.
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The airline, which has major hubs in Fort Lauderdale and Orlando in Florida and in Las Vegas, has struggled for years but its problems were compounded by rising jet fuel prices prompted by the US-Israeli war on Iran, now into its third month. The conflict has largely shuttered the Strait of Hormuz, a key passageway for energy flows, leading oil and gas prices to spike.
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Bailing out Spirit, an airline dating back to the 1980s, would have been Trump’s latest attempt to intervene in a beleaguered US company.
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