Thursday, April 30, 2026

In the late 1980s, President Donald Trump once ran an airline called “Trump Shuttle” that grappled with a spike in oil prices and eventually went under. He may get a chance to rewrite the script.

Trump is proceeding with a federal rescue of Spirit Airlines, the ultra low-cost budget carrier that has rotated through two bankruptcies since 2024. It’s reportedly being structured as a $500 million lifeline that could pave the way for the U.S. government to hold a 90% stake in the airliner.

It may move to the front of the line as a privileged creditor during bankruptcy proceedings. Trump has toyed with the U.S. government buying Spirit outright.

Now other imperiled passenger carriers want a lifeline. The Association of Value Airlines, a trade group representing budget airliners like Frontier, issued a statement on Monday requesting a $2.5 billion liquidity pool to cushion the blow from spiking jet fuel prices. The organization said it would be a “necessary and targeted measure to stabilize operations and keep airfares affordable during this period of volatility.”

What was supposed to be a one-off intervention risks becoming bailout fever.

“If you put the birdfeed out, the birds are going to come,” said Tad Dehaven, a policy analyst at the libertarian-leaning Cato Institute who has studied Trump’s economic interventions. “We're moving from the days of battling over subsidies and tax breaks to the government taking ownership in companies.”

Some in the Trump administration have been publicly skeptical of galloping to Spirit’s rescue. "What we don't want to do is put good money after bad, and there's been a lot of money thrown at Spirit, and they haven't found their way into profitability,” Transportation Secretary Sean Duffy said last week. “And so would we just ​forestall the inevitable and then own that?”

For now, the White House is staying mum on specific details of the pending financial arrangement, both for Spirit and other budget carriers.

“The White House is aware of outreach that was made by a group of budget airlines to the Department of Transportation, and the Administration continues to monitor the health of the U.S. aviation industry for passengers and airline employees,” White House spokesperson Kush Desai said in a statement.

The Trump administration has stakes in 16 companies worth $21 billion, per a recent tally from the Council on Foreign Relations. Spirit could be the 17th, marking a new chapter in the U.S. government’s relationship with airline carriers. It has stirred Republican criticism, but most lawmakers are resigned to Trump’s adventurism in the private sector.

This episode is not a replay of six years ago when the U.S. airline industry was in dire straits. At the time, the outbreak of the pandemic idled passenger aircraft and caused en masse cancellations. The airlines in early 2020 received a $54 billion federal bailout in the form of loans, grants, and warrants to purchase ownership stakes.

Since then, the airliners can increasingly be grouped into two categories: The major legacy airlines and then everyone else.

The largest airliners like Delta and United, which service richer customers who want perks and simultaneously offer cheaper “basic economy” tickets, account for the vast majority of the industry’s profits. All the while, the thriftier, budget-friendly carriers are struggling to fill seats and compete.

Enter Spirit. It was just climbing out of bankruptcy in February with a new creditor deal that allowed it to operate as a smaller airline with fewer routes. That was its move to slash debt obligations. Then the U.S. launched military strikes against Iran alongside Israel, which sent fuel prices skyrocketing. Jet fuel prices have doubled since the start of the year.

Spirit’s footprint in the domestic market amounts to 3.4%, a fraction of the size of Delta, American, and Southwest, each of which hold between 17% and 18% of market share.

Regardless, some aviation experts argue preventing Spirit from collapsing will pay off for passengers since competition forces bigger airliners to keep airfare prices in check.

“The national market share is not always as important as it is on a given route. If you are flying on a route that is served by Spirit, or one of the other ultra low cost carriers, it's a virtual guarantee that you are paying less,” said William McGee, a former aircraft dispatcher who is now a Senior Fellow for Aviation and Travel at the left-leaning American Economic Liberties Project.

For Spirit, there are few routes toward a financial lifeline that can be crafted without Congress. The pandemic-era bailout was authorized through legislation, and it’s not clear whether a bailout greenlit by the executive branch will stick legally. The U.S. budget airline industry is in uncharted terrain.

—Joseph Zeballos-Roig

In a letter to shareholders, General Motors CEO Mary Barra said the company expected to recoup $500 million in tariff refunds after the Supreme Court decision that struck down Trump’s tariff regime.