Spirit Airlines 'days' from running out of cash as creditors resist Trump buyout: report
Beleaguered ultra-low-cost carrier Spirit Airlines is in such dire shape that it could be "days" from being forced to liquidate without an agreement on a government bailout, CBS News' Jennifer Jacobs and Kris Van Cleave reported on Wednesday.
The problem is that not all of Spirit's major creditors are supportive of the deal on the table, which would involve a $500 million infusion in return for up to 90 percent equity for the federal government.
"The deal — which would make the government the senior bondholder, meaning it would get paid back before others — won't happen unless Spirit's creditors sign off," said the report "Some of Spirit bondholders continue to balk at a government deal, sources said. Ken Griffin's Citadel submitted a counterproposal, but it was rejected by the government. Two other creditors — Ares Management Corp. and Cyrus Capital — are also opposed to the government plan, two U.S. officials told CBS News."
All of this, the report noted, comes as the airline "only has enough available cash to continue operations for a matter of days, not weeks."
Spirit has been in financial difficulty for years, as they overexpanded, struggled to recover from the pandemic and made a number of strategic blunders. They were in talks to merge with first Frontier and then JetBlue in recent years, but this was blocked amid antitrust fears, and the two potential buyer airlines are themselves facing financial difficulties now. After this, and two stints in bankruptcy, Spirit briefly looked like it might be able to emerge solvent, but then the Iran war happened, blowing up jet fuel prices.
The proposal to bail out Spirit has been met with skepticism not just by some of the airline's creditors, but by Republicans in Congress and other conservative analysts.
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