BREAKING NEWS
Spirit Airlines has been circling the drain for so long that the drain has started to feel like a personality.
The ultra-low-cost carrier, which entered bankruptcy last year already carrying more debt than dignity, is now making preparations to wind down entirely, according to people familiar with the matter. Jet fuel costs driven by the Iran war have gutted the economics of Spirit’s business model, and no amount of creditor negotiation can fix a cost structure when your primary input is priced like a luxury good. Shares fell 74% on Friday.
The market has been trying to tell Spirit something for years. Blocked mergers, a failed JetBlue acquisition, bankruptcy, creditor restructurings… each time the invisible hand raised a white flag, Spirit found a new way to keep flying. The business model was always a prayer: charge people as little as possible, pack them in tight, and hope fuel stays cheap. Fuel did not stay cheap.
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The Trump administration made one last attempt at a deus ex machina, entertaining a bailout worth up to $500 million in exchange for warrants on up to 90% of the company. Trump himself floated the idea of the federal government simply buying Spirit outright on April 23, calling it a “potentially good investment.” Those talks have since hit an impasse, which, as we’ve argued before, is exactly the outcome Trump should be rooting for.
Here’s the free lunch hiding in Spirit’s collapse: the Biden administration killed the JetBlue merger. Trump doesn’t have to own this. Spirit dies, he points at the previous administration’s antitrust overreach, and he walks away clean. Better yet, he saves the $500 million. JetBlue is not exactly printing money, and it’s going to need a friend in Washington before the year is out. That’s a bailout with a constituency worth having.
At some point, a company stops being a turnaround story and starts being a lesson. Spirit has been the lesson for a while. Washington should let the market finish its sentence.
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