U.S. Government Considers Defense Production Act Loan for Spirit Airlines Amid Bankruptcy

U.S. officials familiar with the discussions said. President Trump is open to some type of federal action regarding the airline, several sources stated. He said publicly he would 'do it to save the jobs' in reference to Spirit Airlines.

Spirit Airlines declared bankruptcy twice in the past two years. The Department of Justice blocked a merger between Spirit Airlines and JetBlue during the Biden administration. Earlier this month, creditors expressed serious doubts that Spirit Airlines could remain viable.

U.S. government to direct industrial production during national emergencies, typically for defense purposes. It includes providing loan authority to private firms for national defense. The strategy to use the Defense Production Act for Spirit Airlines would be subject to approval from Spirit's creditors, two of the officials said.

The Office of Management and Budget has explored what a federal bailout of Spirit Airlines would look like. The Office of Management and Budget has discussed possibilities for a federal bailout of Spirit Airlines that would include Commerce Department and Pentagon involvement. The government would lend Spirit Airlines $500 million at a reasonable interest rate as part of the bailout.

The government would become the top debtor in Spirit Airlines' bankruptcy pecking order as part of the bailout. The loan to Spirit Airlines would be protected by Spirit assets that exceed the government's costs. The bailout would provide taxpayers with a warrant, the right to own 90% of Spirit Airlines after it emerges from bankruptcy.