Cash-strapped Spirit Airlines is on the verge of receiving a rescue package from the federal government, according to a source familiar with the matter.
"Spirit and the federal government are in advanced discussion around the terms of a financing package, which they hope to finalize imminently," the source said.
News of the potential rescue package was first reported Wednesday by the Wall Street Journal, which said the federal government could loan the discount airline as much as $500 million. Bloomberg later reported that in return for the loan, the federal government would receive warrants to purchase up to 90% of Spirit.
The source said the deal should be completed this week, and perhaps as soon as Wednesday.
Spirit declined to comment on the potential bailout.
"We are operating our business as normal. Guests can continue to book, travel and use tickets, credits and loyalty points as usual," a spokesperson said.
Travel Weekly has reached out to the Transportation Department for comment. The Commerce Department is also involved in the discussions, the Wall Street Journal reported.
Word of the impending deal comes one day after President Trump said in an interview with CNBC that he didn't want to see Spirit, and the 14,000 jobs it supports, disappear.
"Maybe the federal government should help that one out, I told my people," Trump said.
Spirit has been in Chapter 11 restructuring since August, having also gone through a bankruptcy in late 2024 and early 2025. Just before the Iran war began, the airline announced plans to emerge from bankruptcy by early summer. But the subsequent near doubling of fuel costs placed further pressure on Spirit, leading to reports that liquidation was imminent.
The source familiar with the bailout-package negotiations said that a federal infusion would put Spirit on track to emerge from Chapter 11 this year. In a March regulatory filing, the airline said it planned to downsize to 76 to 80 aircraft by the third quarter, compared with 214 when Spirit entered its second bankruptcy.
A rescue of Spirit could have a negative impact on money-losing carriers JetBlue and Frontier.
Spirit overlaps with fellow ultralow-cost carrier Frontier on 31.8% of Frontier's capacity, according to an analysis by Deutsche Bank investment analyst Michael Linenberg. JetBlue and Spirit overlap on 21% of JetBlue's capacity, and the two airlines go head-to-head in Fort Lauderdale, which is Spirit's home base and JetBlue's third-largest base.
During United Airlines' Q1 earnings call Wednesday, CEO Scott Kirby said he didn't think a rescue of Spirit would be relevant to United. Still, he called a bailout unnecessary.
"The Spirit business model is fundamentally flawed, and it's going to fail," said Kirby, who has been prognosticating failure in the discount airline sector since shortly after the pandemic.