Republican Lawmakers Oppose Trump's Proposal for Government to Acquire Spirit Airlines

Spirit Airlines has been unprofitable every year since 2019. It has filed for bankruptcy twice in ten months. No private buyer has closed a deal to save it. And now President Donald Trump says the federal government should "just buy it" [1].

The proposal — a potential $500 million loan and up to 90% government equity stake in a discount airline that has lost more than $2.5 billion since 2020 — has ignited one of the most unusual policy fights of 2026, pitting a Republican president against members of his own party on a question that cuts to the core of conservative economic identity: Should the government own a failing business? [2]

A Carrier in Freefall

Spirit Airlines' financial trajectory tells a stark story.

Source: Spirit Airlines SEC Filings

Data as of Dec 31, 2025CSV

The airline posted net income of $335 million in 2019, the last year it turned a profit [3]. The COVID-19 pandemic sent it into a tailspin, and it never recovered. A blocked $3.8 billion merger with JetBlue in 2024 — killed by the Department of Justice on antitrust grounds — eliminated what management considered its primary strategic alternative for addressing roughly $3.3 billion in debt [4].

Spirit filed for Chapter 11 bankruptcy on November 18, 2024, emerging 114 days later in March 2025 after converting approximately $795 million of debt to equity and securing $350 million in fresh investment from existing creditors [4]. But the restructuring did not fix the underlying business. By mid-August 2025, Spirit had lost nearly $246 million in a single quarter and filed an SEC disclosure expressing "substantial doubt" about its ability to continue operating [5]. It filed for Chapter 11 again on August 29, 2025 — what bankruptcy practitioners call a "Chapter 22" [5].

The second filing secured $475 million in debtor-in-possession financing from its bondholders and a key agreement with AerCap, its largest aircraft lessor [6]. The airline cut its fleet to roughly 100 aircraft, down from its peak. Unions agreed to $100 million in pay concessions for pilots and flight attendants [7].

Then came the war in Iran.

The Fuel Crisis That Broke Spirit

The conflict in Iran and the partial closure of the Strait of Hormuz — through which roughly 20% of global oil trade passes — sent jet fuel prices surging by as much as 95% in North America [8]. WTI crude oil briefly exceeded $120 per barrel before falling back below $100 following a ceasefire [9]. For an airline already bleeding cash in bankruptcy, the timing was catastrophic.

Spirit warned in a March 2026 annual financial report that the fuel cost spike would have an "immediate and substantial negative impact" on results, potentially upending its agreements with lenders and pushing it toward liquidation [10]. By mid-April, the airline's lawyers told a bankruptcy judge that Spirit needed access to $240 million of its funds by the end of the following week or it would cease operations [11].

Spirit came within days of shutting down in December 2025, surviving only after securing $50 million in emergency funding [7]. This time, with fuel costs far higher and no private rescue in sight, the Trump administration stepped in.

"I Think We Just Buy It"

On April 23, 2026, President Trump told reporters he would consider purchasing Spirit Airlines "if we can get it at the right price," framing it as a business proposition: buy low, wait for oil prices to fall, and "sell it for a profit" [1]. The administration simultaneously disclosed discussions about a loan of up to $500 million, with the government potentially acquiring a 90% equity stake [2][12].

Under the emerging framework, Spirit would serve as a quasi-defense asset, transporting military equipment, cargo, and active-duty troops during periods of excess capacity [13]. The legal vehicle under consideration: the Defense Production Act of 1950, a Korean War-era statute that grants the president broad emergency powers to direct production of goods and services deemed critical to national defense, including the authority to extend loans and make investments in private firms [13].

Transportation Secretary Sean Duffy was reported not to favor the plan [1]. White House spokesman Kush Desai said the administration "continues exploring possible options to ensure the airline remains in operation for its passengers and employees," while cautioning that reporting about the specific mechanism "should be regarded as speculation" [13].

The GOP Revolt

The backlash from within Trump's own party was immediate and forceful.

Sen. Ted Cruz of Texas, chairman of the Senate Subcommittee on Aviation and Space, posted on X: "This is an absolutely TERRIBLE idea. The TARP corporate bailouts were a huge mistake & the government doesn't know a damn thing about running a failed budget airline" [1][14].

Sen. Tom Cotton of Arkansas was more measured but no less skeptical: "If Spirit's creditors or other potential investors don't think they can run it profitably coming out of its second bankruptcy in under two years, I doubt the US Government can either" [1].

Sen. Ted Budd of North Carolina said "Americans shouldn't be on the hook for another failing business as its competition thrives" [15].

An advocacy group aligned with former Vice President Mike Pence issued a statement: "American families shouldn't be forced to bail out Spirit and the shareholders or pay the bill to see if the federal government can run an airline. Conservatives must oppose this bailout" [15].

Investor and television personality Kevin O'Leary called the idea a non-starter, slamming the administration's approach as fundamentally at odds with market discipline [16].

The opposition is bipartisan. Sen. Elizabeth Warren also expressed concerns, though from a different angle — focusing on whether the deal would primarily benefit institutional creditors rather than workers or consumers [14].

The Hypocrisy Question

The Republican critics' free-market rhetoric invites scrutiny of their own records. In March 2020, Ted Cruz voted in favor of the CARES Act, which passed the Senate unanimously and included $25 billion in direct payroll grants and $25 billion in loans to U.S. airlines [17][18]. Cruz, at the time, appeared on Fox News to advocate for the airline provisions, arguing that "helping airlines take wing will boost the entire economy" [17].

The CARES Act airline bailout was, of course, structured differently — grants and loans with strings attached, not government equity ownership. And the pandemic was an unprecedented external shock that grounded nearly all air travel simultaneously, a meaningfully different scenario from a single carrier's chronic unprofitability. But the principle that taxpayer money should flow to failing airlines when the circumstances demand it is one Cruz explicitly endorsed six years ago.

Cotton's record on the CARES Act is less prominently documented, though he engaged actively with subsequent COVID relief legislation and co-sponsored amendments to target spending more narrowly [19].

The Legal Minefield

The administration's proposed use of the Defense Production Act faces serious legal objections. The DPA requires a showing that without the intervention, U.S. industry cannot provide needed capacity for national defense, and that the loan is the most cost-effective and practical way to address the shortfall [20].

Aviation legal analysts have argued this threshold is nearly impossible to meet. The U.S. airline industry has substantial excess capacity across dozens of carriers. Spirit's fleet of roughly 100 aircraft represents a small fraction of total domestic capacity, and the Department of Defense has existing contracts with major carriers through the Civil Reserve Air Fleet (CRAF) program [20].

"There is absolutely no legal authority for the administration to take an ownership stake in Spirit Airlines as a form of bailout," wrote aviation commentator Gary Leff, noting that every prior airline bailout in U.S. history was authorized by Congress [20]. The constitutional concern is broader: if a Spirit Airlines bailout qualifies as national defense, the limiting principle vanishes, and congressional appropriations authority — the power of the purse — is effectively circumvented by executive action [20].

Historical precedent reinforces this point. The TARP program that rescued AIG and GM required the Emergency Economic Stabilization Act of 2008, passed by Congress. Conrail was created by the Rail Reorganization Act of 1973, also an act of Congress. The CARES Act airline provisions were legislatively authorized. No modern government acquisition of a private company has been executed purely through executive power [21].

Who Actually Benefits?

Following Spirit's first bankruptcy, bondholders became the airline's majority equity owners. Former bondholders including Citadel Advisors and Pacific Investment Management Co. (PIMCO) emerged as major shareholders after $795 million in debt was converted to equity, with recent SEC filings confirming their stakes [22]. Holders of senior secured and convertible notes received $840 million in new secured notes [4].

A $500 million government loan that prevents liquidation would, by definition, protect these institutional investors' equity positions. If Spirit liquidates, bondholder-turned-shareholders lose their stakes. If the government steps in, those positions retain value.

This is the tension Warren and other critics have identified: a deal framed as protecting 17,000 jobs and consumer air service may function primarily as a mechanism to make institutional creditors whole — a creditor bailout dressed in the language of consumer protection [14][22].

Defenders of the proposal counter that protecting jobs and protecting creditors are not mutually exclusive — preventing liquidation serves multiple constituencies simultaneously [11].

17,000 Jobs and Underserved Communities

The human stakes are real. Spirit employs more than 17,000 people whose jobs would be eliminated in a liquidation [11]. The International Association of Machinists and Aerospace Workers, representing Spirit's ramp service employees, has demanded that any bailout include "no furloughs, no layoffs, and no shifting the burden onto the very people who keep this airline running" [23].

Spirit has also positioned itself as a carrier serving underserved markets. In 2025, the airline announced a partnership with regional carrier Contour Airlines to connect Essential Air Service (EAS) communities — small cities with limited commercial air options — to major leisure destinations [24]. The partnership aimed to reduce travel costs for communities typically bypassed by larger carriers.

If Spirit liquidates, those routes disappear. Competing carriers may absorb some high-demand routes, but smaller markets with thin margins are unlikely to attract replacement service [25]. NPR's analysis of the industry impact noted that Spirit's exit would reduce competition on routes where it is the sole or primary low-cost option, likely raising fares for remaining passengers [25].

The administration's own 2026 budget proposal, however, has proposed cutting over $300 million in funding for EAS flights — the very program that subsidizes air service to many of the communities Spirit serves [24]. This creates an internal contradiction: the same administration seeking to spend $500 million to save Spirit is simultaneously cutting the programs that support the underserved routes the bailout is supposed to protect.

The Bailout Scorecard: Conrail, AIG, and GM

Proponents of government intervention can point to genuine successes.

Source: Congressional Research Service / Treasury Dept.

Data as of Jan 1, 2025CSV

Conrail is the closest structural analogy. After a bankruptcy judge determined that no private reorganization plan was viable for the bankrupt northeastern railroads, Congress created the Consolidated Rail Corporation in 1976. Conrail began operations with roughly $7 billion in federal investment (adjusted for inflation), became profitable by 1981, and was privatized in 1987 for $1.9 billion — a loss for taxpayers in nominal terms, but one that preserved freight rail service across the northeastern United States [21].

AIG was the financial crisis success story. The government invested approximately $182 billion in the insurance giant and ultimately recovered about $205 billion, earning a profit for taxpayers. But AIG was a systemically important financial institution whose failure threatened the global financial system — a scale of risk Spirit Airlines does not present [21].

General Motors received $51 billion in TARP funds. The government recovered roughly $39 billion before selling its final shares in 2013, crystallizing a loss of approximately $11.2 billion. Supporters argue the broader economic value — preserving the auto supply chain and hundreds of thousands of jobs — justified the cost [21].

Does Spirit resemble any of these cases? Conrail is the closest parallel: a transportation company in a specific market segment where private capital had failed. But Conrail served freight routes with no substitute; Spirit operates in a competitive airline market with multiple alternatives on most routes. The "no private solution is viable" condition that justified Conrail has not been conclusively demonstrated for Spirit — private options have been pursued but have not yet been exhausted.

Why No Private Buyer Has Closed

Spirit has not lacked for suitors. Frontier Airlines made a formal merger proposal in early 2025, offering Spirit's stakeholders $400 million in second-lien debt and 19% of Frontier's equity [26]. Spirit's creditors rejected it, with 99.99% voting for a standalone plan instead [26].

Merger talks with Frontier resumed in December 2025, but no deal materialized [27]. In January 2026, alternative investment firm Castlelake — a $33 billion asset manager — entered discussions for a potential takeover [7]. That deal also failed to close.

The pattern reveals the core problem: Spirit's cost structure, fleet composition (including Pratt & Whitney engine issues that grounded 20% of its neo fleet), and competitive position in a market where legacy carriers have aggressively expanded basic economy products make it difficult for any buyer to underwrite a profitable path forward [5]. Frontier saw value in Spirit's routes and slots but not at a price Spirit's creditors would accept. Castlelake may have been interested in the assets — aircraft, gates, landing slots — rather than the operating airline, prompting concerns it would buy Spirit "for spare parts" rather than preserve it as a going concern [28].

The Amtrak Warning

If the government does acquire Spirit, the question becomes: what kind of entity would it be? The administration has not specified a governance structure. The options range from a temporary conservatorship (buy, stabilize, sell) to a quasi-public corporation modeled on Amtrak to a new federal agency.

Amtrak's 55-year track record offers a cautionary data point. The national passenger railroad has never earned a profit in its history, consuming more than $50 billion in cumulative federal subsidies [29]. In fiscal year 2025, Amtrak lost $2.09 billion despite record taxpayer support [29]. Its long-distance routes account for 20% of passenger revenue but 86% of operating losses, with the average per-passenger federal subsidy reaching $362 on its worst-performing routes [29].

The Northeast Corridor between Boston and Washington is the only segment that approaches breakeven [29]. Everything else operates as a permanent public subsidy. Political pressures — from members of Congress protecting routes through their districts — have historically prevented Amtrak from cutting money-losing services to improve its financial position.

A government-owned Spirit Airlines would face identical dynamics. Every route cancellation would become a political fight. Every fare increase would draw congressional scrutiny. The commercial discipline that private ownership imposes — the willingness to cut losses — would be replaced by political calculation.

What Happens Next

The immediate timeline is measured in days, not months. Spirit's lawyers told the bankruptcy court it needs financing by the end of April or it faces liquidation [11]. The administration is in "advanced talks" on the terms of a federal financing package [11].

Congressional opposition may prove irrelevant if the administration proceeds under the Defense Production Act without seeking legislative authorization — though that path would almost certainly face legal challenges. Several legal scholars have argued the DPA simply does not authorize what the administration is contemplating [20].

The alternative scenarios remain theoretically available: a last-minute private deal with Castlelake or another buyer, a restructured Frontier merger, or a partial asset sale that preserves some routes while allowing the corporate entity to wind down. Each of these would impose costs — job losses, reduced service, higher fares — but would keep taxpayers off the hook.

The Spirit Airlines question is ultimately not about one airline. It is about whether the executive branch can unilaterally commit hundreds of millions of taxpayer dollars to acquire a private company, whether "national defense" can be stretched to cover a budget airline, and whether the same political movement that has spent decades arguing against government intervention in markets will accept it when a president of their own party proposes it.

The answer to those questions will matter long after Spirit Airlines' last flight — or its next one — has landed.