Spirit Airlines is going under after a government rescue plan failed, according to reports. Creditors reportedly balked at the U.S. government’s terms for rescuing the bankrupt airline, according to a report by The Wall Street Journal. 

Key Facts

• Spirit Airlines is preparing to cease operations after a government bailout deal failed, The Wall Street Journal reported Friday.
• The airline, which went bankrupt twice since 2024, had hoped for a $500 million bailout that would have given the U.S. government the right to take a 90% stake in the budget airline.
• Some of Spirit’s bondholders—including billionaire Ken Griffin’s Citadel hedge fund—balked at the government’s insistence on being paid back before other creditors, CBS News reported earlier this week.
• Spirit would run out of operating cash within days, the carrier’s attorney told its bankruptcy judge.
• President Trump on Friday told reporters “we're looking at it” when asked if the government had decided against bailing out the budget carrier.
• A company spokesperson declined to comment on ongoing discussions but told Forbes “Spirit is operating as usual.”
• Jet fuel was $4.51 a gallon Thursday on the Argus U.S. Jet Fuel Index—up 80% since the U.S. and Israel launched initial airstrikes against Iran nearly nine weeks ago.

Will More U.s. Airlines Be Killed Off By Jet Fuel Prices?

The price of jet fuel—which normally accounts for up to 30% of an airline’s overall costs—skyrocketed in March, wiping billions of dollars from U.S. airlines’ bottom lines in the first quarter. American Airlines told investors its jet fuel bill will increase by $4 billion in 2026. In the second quarter, Delta Air Lines said it will spend $2 billion more on fuel than it previously planned and Southwest Airlines called it “a billion dollar headwind.” Aside from Spirit, the most vulnerable carriers are budget airlines Frontier and JetBlue, which have struggled to be profitable since the Covid pandemic. Separate from the failed Spirit rescue, a group of budget airlines asked the Trump administration for $2.5 billion in government aid to address the spike in jet fuel costs during the U.S.-Israeli war on ​Iran. Asked about a possibility of government assistance, JetBlue Airways CEO Joanna Geraghty told investors this week, “Never say never. We’re open to anything and everything, assuming the terms would make sense for JetBlue.”

What We Don’t Know

When jet fuel prices will decline. “We're looking at probably a six month or longer timeline for the supplies of jet fuel to get back to normal, or even close to normal, levels,” Henry Harteveldt, president of Atmosphere Research Group, a travel market research and advisory firm, told Forbes.

Crucial Quote

“Why should the government bail out budget airlines if they're not going to bail out other airlines, such as Delta or JetBlue or American, when everybody's paying more for their jet fuel?” Harteveldt told Forbes.

The Bailout Plan Had Many Critics

Trump appeared to be for rescuing Spirit, last week telling reporters in the Oval Office “I think we’d just buy it.” But the chiefs of legacy airlines and several Republican legislators criticized the plan. “What we don’t want to do is put good money after bad,” Duffy told Reuters. “There’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability.” A conservative political advocacy group founded by former Vice President Mike Pence issued a policy paper urging against a rescue plan, writing that “bailing out Spirit creates the expectation that American taxpayers, at the whim of politicians, will bail out other struggling airlines.” Sen. Ted Cruz, R-Texas, called rescuing Spirit “an absolutely TERRIBLE idea,” adding, “the government doesn’t know a damn thing about running a failed budget airline.”

BySuzanne Rowan Kelleher, Forbes Staff. Suzanne Rowan Kelleher covers travel for Forbes.