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Spirit Airlines is gearing up for a complete shutdown after a rescue attempt by the Trump administration failed.
According to The Wall Street Journal, the company struggled to make a deal with its creditors and secure funding to maintain operations.
After earlier reports suggest that Spirit was close to liquidation, the Trump administration said it was working out a deal to keep the airlines afloat, including a potential $500 million loan from the federal government.
President Trump said last week that he was aware the company has been struggling and even suggested the federal government could buy out the carrier.
Furthermore, Spirit could become the first major US carrier to liquidate since the 2008 recession if the airline shuts down.
Spirit and other airlines have been struggling with high oil prices that have led to a surge in price of jet fuel. Besides that, the company was also struggling to increase post-pandemic demand.
In 2024, a federal judge blocked a $3.8 billion merger between JetBlue and Spirit on antitrust grounds, saying the merger would reduce competition among airlines and harm customers.
Blaming the Biden administration, the White House, in earlier statements, said the company would "be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue".
A group of other budget carriers, including Frontier and Avelo, reportedly pitched a $2.5 billion bailout to the Trump administration last week, as they have been severely affected by higher fuel prices.
Budget airlines offer consumers low base-level fares but typically add on hefty fees for services such as carry-on bags and seat selection.
Leaders of the "big three" US carriers, American Airlines, Delta and United, have said their companies have been affected by fuel prices, but that solid demand has made them resilient against rising prices.
Last month, the CEO of Delta said demand among high-paying customers remains strong and that the company still has room to raise fare prices.
A Spirit spokesperson declined to comment on "ongoing discussion" but noted that the airline is operating as usual.
Founded in 1983 as Charter One Airlines, Florida-headquartered Spirit operates throughout the US, Latin America and the Caribbean.
It was reported that if Spirit Airlines shuts down and lessens the competition within the airline industry, it could lead to higher prices for consumers.
