Spirit Airlines Running out of Cash as $500M Government Lifeline Sparks Backlash

CNBC, CNN, and Axios contributed to this report.

Spirit Airlines is running out of runway – fast.

At a bankruptcy court hearing in New York, the airline’s lawyer didn’t sugarcoat it: the cash available to keep planes in the air could dry up within days. Without fresh funding or access to roughly $240 million in restricted reserves, operations may not last past next week.

Behind the scenes, there’s a potential escape hatch. The company is in advanced talks with the administration of Donald Trump over a rescue package that could inject up to $500 million. But there’s a catch – a big one. The deal could hand the US government as much as a 90% stake in the airline, putting it ahead of other creditors.

That idea is already setting off alarms in Washington.

Republican lawmakers, usually aligned with Trump, are openly pushing back. Senator Ted Cruz blasted the proposal as a repeat of past bailout mistakes, while Tom Cotton questioned why taxpayers should step in if private investors won’t. Ted Budd echoed the concern, arguing Americans shouldn’t be footing the bill for a struggling airline.

Even within the administration, there’s hesitation. Transportation Secretary Sean Duffy has raised doubts about whether saving Spirit would just delay the inevitable.

The airline’s problems didn’t appear overnight. Years of pressure have piled up – a blocked merger with JetBlue Airways, costly engine issues, and a shift in traveler preferences toward more premium options. Now add surging fuel prices tied to tensions in the Middle East, and the situation has gone from difficult to urgent.

Spirit had hoped to exit bankruptcy by midyear. That timeline is slipping.

Inside the courtroom, the message was blunt: the company is at a crossroads. Large chunks of its cash are locked up under bankruptcy terms, while the rest is earmarked for essentials like payroll and taxes. Without a quick fix, the low-cost carrier risks being grounded entirely.

There’s a broader question hanging over all of this – what happens if the government steps in?

Trump’s administration has already taken stakes in multiple companies over the past year, pouring billions into private businesses. Supporters argue it protects jobs and key industries. Critics see something else: a sharp turn away from free-market principles.

A bailout might keep Spirit alive a little longer. It doesn’t guarantee a turnaround.

And with competitors like Delta Air Lines, American Airlines and United Airlines holding stronger positions – and offering their own budget options – the road ahead looks rough either way.