Trump Administration Considers Defense Production Act for Spirit Airlines Bailout

The Trump administration is considering invoking the Defense Production Act to assist Spirit Airlines, which has filed for bankruptcy twice in the past two years. Sources indicate the plan includes a $500 million government loan, granting the U.S. a 90% ownership stake upon the airline's emergence from bankruptcy.

This move aims to prevent liquidation and preserve jobs amid escalating jet fuel costs driven by the ongoing war with Iran. President Trump expressed support for federal action, stating he would pursue it to save jobs. He highlighted Spirit's assets, including aircraft and airport slots, as valuable.

The strategy requires approval from Spirit's creditors and involves protecting taxpayer interests through asset-backed security.

declared bankruptcy for the second time recently, following a previous filing within the last two years. The Department of Justice blocked a proposed merger with JetBlue during the prior administration, contributing to the airline's instability. Creditors raised concerns about viability earlier this month, exacerbated by war-related fuel price surges affecting all carriers.

At the end of 2025, Spirit owned 48 planes and leased 83. The airline holds slots at Newark Airport, a hub for United Airlines.

Under the plan, the Pentagon would utilize Spirit's excess capacity for transporting troops and military cargo. The government would become the top debtor in bankruptcy proceedings, with the loan at a reasonable interest rate. Officials stated that Spirit would likely be sold to another carrier after stabilization.

Commerce Secretary and White House officials advocate for the intervention, arguing it prevents job losses during wartime economic pressures. In contrast, Transportation Secretary opposes it, warning of political complications and the prolongation of an inevitable financial failure.