Budget airline Spirit Airlines is reportedly preparing to shut down after talks to secure a $500 million federal bailout apparently collapsed.
The Wall Street Journal first reported on Spirit’s imminent demise Friday morning. The Journal said that as negotiations petered out, the company simply ran out of money.
President Donald Trump had been positive about the deal and recently made remarks about saving the company.
“They have some good aircraft and good assets,” Trump said Thursday. “I’d love to be able to save those jobs. I’d love to be able to save an airline.”
But some Cabinet members weren’t so optimistic about the deal. Transportation Secretary Sean Duffy noted that Spirit has yet to turn a profit.
“What we don’t want to do is put good money after bad, and there’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability,” Duffy said. “And so would we just forestall the inevitable and then own that?”
The last time a major U.S. airline went under was in 1991, when Pan American World Airways ceased operations. The company’s unexpected collapse left thousands of passengers stranded, as they tried to receive refunds from a suddenly defunct company.
Nearly 10,000 people lost their jobs when Pan Am, then one of the country’s largest airlines, closed.
With Spirit’s apparent closure looming, nearly 13,000 people may soon be seeking employment in a market experiencing a hiring slowdown.
Budget airlines under pressure
Spirit and other budget airlines are having an especially hard time weathering surging fuel prices and higher operating expenses. Experts told Straight Arrow that these airlines are struggling to keep up with larger companies.
“In traditional times, when jet fuel prices have soared like this, we’ve seen a wave of mergers and acquisitions and bankruptcies in the airline industry,” said Clint Henderson, principal spokesperson for The Points Guy, a travel rewards website.
Henderson said the industry may now be at the beginning of that process, with “Spirit the first domino to fall, but probably not the last.”
Fewer budget airlines could lead to higher airfares for consumers, experts said.
“Everybody loves to hate on the low-cost carriers until they go out of business, and then fares go up across the board,” Henderson said.
When Spirit stopped serving the Minneapolis-St. Paul International Airport in late 2025, Delta Air Lines raised prices for flights leaving that airport by about 50%. Henderson said the price hike happened “almost overnight.”
Delta did not immediately respond to Straight Arrow’s request for comment.