Spirit Airlines bailout? These Republicans aren't happy about it
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Opposition to President Trump's potential Spirit Airlines bailout is mounting in Congress, including among his fellow Republicans.
Why it matters: Lawmakers from both parties are questioning whether taxpayers should rescue a repeat-bankrupt airline with an uncertain path to profitability.
What they're saying: "This is an absolutely TERRIBLE idea," Sen. Ted Cruz (R-Texas) said on X, saying "the government doesn't know a damn thing about running a failed budget airline (that the Biden admin killed)."
- "Americans shouldn't be on the hook for another failing business as its competition thrives," Sen. Ted Budd (R-NC) said.
- "If Spirit's creditors or other potential investors don't think they can run it profitably coming out of its second bankruptcy in under two years, I doubt the US Government can either," Sen. Tom Cotton (R-Ark.) said. "Not the best use of taxpayer dollars."
- "What do the American people get out of this taxpayer bailout?" Sen. Elizabeth Warren (D-Mass.) said, blaming Trump for worsening Spirit's crisis with the Iran war, which raised jet fuel prices. "Will the failed airline executives be held accountable?"
Catch up quick: Spirit — which is teetering on the edge of liquidation — is in negotiations with the White House to obtain emergency financing, Spirit attorney Marshall Huebner confirmed during a court hearing Thursday.
- The administration is weighing providing up to $500 million in financing in a deal that would provide the U.S. government with a massive ownership stake in the struggling budget carrier — possibly up to 90%.
- The White House has said it wants to help the 17,000 remaining employees at the company.
Flashback: A Trump bailout of Spirit would resurrect an age-old playbook by Uncle Sam that has registered some big wins and some devastating flops.
- Government bailouts saved General Motors and Chrysler from catastrophic collapses during the Great Recession, but failed to save trucking firm Yellow from liquidation during the pandemic.
Yellow's demise is particularly fresh on Washington's mind.
- Trump delivered $700 million in emergency capital to Yellow in 2020, forestalling the company's financial crisis.
- Yellow eventually repaid the loan, but not until it had filed for bankruptcy and set in motion its liquidation plans.
- The Teamsters lost 22,000 union jobs in the company's collapse, and the government lost its 30% stake.
Between the lines: The question is whether Spirit can find a viable business model with or without a bailout.
- The company has struggled to compete with its better-capitalized rivals, like United, American and Delta, which have been offering lower-cost options to lure penny-pinching travelers.
- And now the spike in jet fuel prices triggered by Trump's Iran war has added to its troubles.
The bottom line: Bailouts can prevent disaster for a time but can't change market conditions.
