Spirit Airlines Racing Against Time as Bankruptcy Cash Runs Low, Government Loan in Play

Spirit Airlines is burning through its remaining cash faster than expected, and the company’s lawyer told a bankruptcy court Thursday that a government rescue package is now on the table to keep the budget carrier from grounding flights. Marshall Huebner, an attorney from Davis Polk representing Spirit, said the airline needs access to existing funds or new financing within days—likely by the end of next week—to continue operations. “The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer,” Huebner said in a New York courtroom. He explained that the company must either tap into nearly $240 million in restricted cash or secure new loans, or both. Without it, the iconic Florida-based discounter faces the real risk of shutting down. Huebner confirmed that Spirit has been in “advanced” talks with the Trump administration for financial backing. Sources familiar with the matter told CNBC that a $500 million loan is being discussed, which could give the government a potential 90% stake in the airline. The proposed deal has been shared with creditor groups, though those involved requested anonymity because they were not authorized to speak publicly. Spirit had hoped to emerge from bankruptcy by midyear, but a surge in fuel prices following U.S. and Israeli strikes on Iran threw those plans into chaos. The airline has been struggling for years, hit by an engine recall, a blocked merger with JetBlue, and shifting customer tastes toward pricier carriers. Huebner warned that Spirit stands at a decisive moment, with hundreds of millions in cash locked away under bankruptcy loan terms while separate accounts hold funds for payroll and taxes. He argued that new financing would allow Spirit to remain a fierce competitor and potentially become a key player in industry consolidation.