There’s a real chance the U.S. government could end up taking over Spirit Airlines, especially if President Trump is to be believed. The news comes as the failing budget carrier is in the middle of negotiating some sort of federal bailout. From The Wall Street Journal:
“We’re thinking about doing it, helping them out, meaning bailing them out, or buying it. I think we’d just buy it,” Trump said, speaking from the Oval Office Thursday. He said that Spirit’s aircraft and assets were good and that the government could sell the company for a profit when the price of oil fell.
“I’d love to be able to save those jobs,” Trump said. “I’d love to be able to save an airline.”
Spirit said it was grateful for the President’s support, ignoring the fact that fuel prices skyrocketed due to a war he partially helped start. That’s neither here nor there, though. I suppose it needs to do everything it can to find a way to stay afloat and keep its employees, you know, employed.Â
The Trump administration this week has been considering a rescue of Florida-based Spirit, which helped pioneer the ultralow cost model. Senior officials have been considering a loan of as much as $500 million, in return for warrants that could give the government a significant stake in the airline, The Wall Street Journal has reported.
Spirit has been laboring to emerge from its second trip to bankruptcy in less than a year. The escalating cost of jet fuel, driven sharply higher by the Iran war, has upended its plan. Creditors in recent weeks have been considering options including a potential liquidation.
Stakeholders at the company and in the government seem split on whether or not the U.S. should actually bail out Spirit.
A key bondholder group on Thursday voiced opposition to the government bailout plan, concerned it could harm their economic interests and leave them with a small minority stake in the airline.
Commerce Secretary Howard Lutnick has been the main proponent of the Spirit deal, seeing it potentially delivering a win for Trump by preserving the airline’s roughly 14,000 jobs, the Journal reported this week.
Transportation Secretary Sean Duffy has voiced caution, pointing out that past government rescues, like the federal bailout of banks during the 2008 financial crisis, were politically unpopular. Other Republican lawmakers, including Sen. Ted Cruz (R., Texas) and Sen. Tom Cotton (R., Ark.), have also voiced opposition.
On Thursday, more allies of the administration aired reservations. Stephen Moore, a longtime economic policy adviser to Trump, told the Journal that he relayed his concerns to senior White House and administration officials.
Earlier this week, Trump said he liked “having a lot of airlines so it’s competitive.” The man has such a way with words, doesn’t he? He also added fuel to the fire by saying, “If we could get it for the right price, I’d do it,” adding that he had a candidate in mind to run the airline.
