The Trump administration is reportedly considering invoking the Defense Production Act as a means to assist Spirit Airlines, which has faced significant financial challenges. U.S. officials familiar with the situation have indicated that President Trump is amenable to taking federal action, expressing his commitment to “do it to save the jobs.” Spirit Airlines has filed for bankruptcy twice in the past two years, following the Department of Justice’s rejection of a merger with JetBlue during the Biden administration. The ongoing conflict in Iran has exacerbated rising jet fuel costs, leading creditors to question Spirit’s long-term viability.
The Defense Production Act is a federal emergency measure that enables the government to direct private industries to fulfill government contracts and increase supplies of essential goods. It also authorizes loan provisions for private companies related to national defense, potentially offering a crucial lifeline for Spirit Airlines. However, any strategy would require the approval of Spirit’s creditors, according to two officials.
The Office of Management and Budget has explored the contours of a possible federal bailout, discussing various scenarios that may involve the Commerce Department and the Pentagon. One proposal includes a $500 million loan to Spirit at a reasonable interest rate, which would position the government as the highest-ranking creditor in the event of bankruptcy. This loan would be backed by Spirit’s assets, providing taxpayers with a warrant to acquire 90% ownership of the airline post-bankruptcy. Additionally, the Pentagon might utilize some of Spirit’s excess capacity for troop and cargo transport.
A significant threat to Spirit’s operation arose when the airline defaulted on an interest payment, which became apparent during a recent bankruptcy hearing. This missed payment has placed the airline in a precarious financial position, potentially allowing creditors a seven-day window to take default action. Spirit’s attorney has indicated that the airline may only have a matter of days left to operate without governmental intervention.
Currently, Spirit has about $250 million in cash, but these funds are restricted due to creditor liens, leaving the airline with limited liquidity moving forward. The government has reportedly provided creditors with a term sheet and is in discussions regarding the proposed deal, positioning the federal government as the senior bondholder.
White House spokesman Kush Desai emphasized President Trump’s interest in protecting Spirit Airlines and indicated that discussions are ongoing to maintain the airline’s operations for both passengers and employees. However, the discussions face internal friction, as Commerce Secretary Howard Lutnick advocates for government intervention, while Transportation Secretary Sean Duffy raises concerns about the political ramifications and the practicality of delaying Spirit’s inevitable financial failure.
Amid rising fuel prices due to the conflict in Iran, Trump officials are inclined to prevent the collapse of an American airline. President Trump acknowledged Spirit’s assets and aircraft, highlighting the value of the airline’s operations. As of the end of 2025, Spirit owned 48 planes and leased an additional 83.
Plans for liquidation have been floated, including selling Spirit’s landing slots at Newark Airport, but the Trump administration has rejected this idea. Instead, the government seeks to preserve these slots to make Spirit more appealing for potential buyers in the future.
