By Sabrina Valle, David Shepardson, Rajesh Kumar Singh and Doyinsola Oladipo
WASHINGTON, May 2 (Reuters) – Bankrupt discount carrier Spirit Airlines ceased operations on Saturday, the industry’s first casualty linked to the Iran war, after failing to secure creditor support for a U.S. government bailout plan.
The collapse of the first carrier due to a doubling in jet fuel prices during the two-month-old Iran war will cost thousands of jobs. It is a blow to President Donald Trump, who had proposed $500 million to save Spirit despite opposition from some of his closest advisers and many Republicans in Congress.
No U.S. carrier of Spirit’s size – it accounted for 5% of U.S. flights at one point – has liquidated in two decades. Spirit helped keep fares lower in markets where it competed against major carriers.
‘WHAT WOULD SOMEONE BUY?’
A Spirit board meeting had ended without an agreement to rescue the company, a person close to the discussions told Reuters late on Friday.
“Unfortunately, despite the Company’s efforts, the recent material increase in oil prices and other pressures on the business have significantly impacted Spirit’s financial outlook,” Spirit said in a statement announcing “an orderly wind-down of operations.”
Trump said on Friday that the White House had given Spirit and its creditors a final rescue proposal, after talks hit an impasse over a $500 million financing package that would have helped the airline keep operating through bankruptcy.
“If we can help them, we will, but we have to come first,” Trump told reporters. “If we could do it, we’d do it, but only if it’s a good deal.”
The collapse shows how the Iran war’s fuel-price shock has exposed weaker airlines.
Spirit’s restructuring plan assumed jet fuel costs of about $2.24 a gallon in 2026 and $2.14 in 2027, but prices had climbed to around $4.51 a gallon by the end of April, leaving the carrier unable to survive without fresh financing.
Transportation Secretary Sean Duffy told Reuters he had tried to get many airlines to buy Spirit but found no takers. “What would someone buy?” Duffy asked. “If no one else wants to buy them, why would we buy them?”
A creditor close to the deal said, “The Trump administration made an extraordinary effort to try and save Spirit, but you can’t breathe life into a corpse. Given that, the company should make its intentions clear for the sake of its customers and employees.”
Spirit’s volatile over-the-counter stock plunged 25% on Friday. Shares of rival Frontier Airlines rose 10%, while JetBlue Airways gained 4%.
Spirit had reached a deal with its lenders that would have helped it emerge from its second bankruptcy by late spring or early summer. But those plans derailed after the war triggered a spike in jet fuel prices, upending Spirit’s cost projections and complicating its bankruptcy exit.
Spirit has 4,119 domestic flights scheduled between May 1 and May 15, offering 809,638 seats, according to the latest data from Cirium.
Last month Trump said his administration was looking to buy the embattled carrier at the “right price.”
Sources said that the administration had proposed $500 million in financing in exchange for warrants equivalent to 90% of Spirit’s equity.
There had been disagreements inside the Trump administration over whether and how to fund the bailout, the Wall Street Journal reported, citing people familiar with the matter.
(Reporting by David Shepardson in Washington, Doyinsola Oladipo in New York, Rajesh Kumar Singh in Chicago, Shivansh Tiwary and Shivani Tanna in Bengaluru; Additional reporting by Gram Slattery in Washington; Editing by Anil D’Silva, Sriraj Kalluvila, Rod Nickel, Stephen Coates and William Mallard)
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