President Donald Trump is weighing a taxpayer-backed takeover of Spirit Airlines as the low-cost carrier struggles to stay afloat amid a surge in fuel prices.
Trump's Proposal
“I think we just buy it,” the Republican president told reporters in the Oval Office on Thursday afternoon. “We'd be getting it virtually debt-free.”
“They have some good aircraft, good assets, and when the price of oil goes down, we'll sell it for a profit,” he continued. “I'd love to be able to save those jobs.”
Spirit Airlines' Struggles
The Florida-based budget carrier, which employs about 14,000 people, filed for Chapter 11 bankruptcy twice in the past two years, most recently in August. In March, it announced its debt and lease obligations stood at around $7 billion.
Since then, the airline has downsized its fleet and streamlined its business model. Yet, like other carriers, it has been strained by jet fuel prices, which have roughly doubled since the outbreak of the Iran war, forcing many to boost ticket prices.
CEO's Response
CEO Dave Davis said he appreciates Trump’s interest in the company, whose bright yellow planes flew millions of passengers last year.
“We are grateful for President Trump's support and look forward to continuing to work with him and his Administration on a solution that protects thousands of jobs, preserves and enhances competition and helps ensure Americans continue to have access to affordable fares,” Davis said in a statement provided to The Independent.
Details of the Proposed Deal
The Wall Street Journal first reported earlier this week that the Trump administration is considering a buyout. Under the proposed agreement, the federal government would loan Spirit Airlines up to $500 million in exchange for warrants granting a major stake in the airline, sources familiar with the matter told the outlet.
Both the Commerce Department and the Transportation Department have participated in the discussions, which have not been finalized. On Tuesday evening, Trump met with multiple Cabinet secretaries to hammer out a deal.
Broader Context
A government rescue of the budget carrier would represent yet another Trump administration foray into private-sector investments. Last year, the federal government took a 10 percent stake in Intel, becoming the semiconductor giant's largest shareholder. The Commerce Department and Defense Department have also invested in rare-earth metals firms.
