President Donald Trump’s desire to “just buy” bankrupt Spirit Airlines has spurred division among his advisers and drawn backlash from members of his party who argue that Republicans would be reversing their long-standing opposition to government ownership of corporations.
The administration has been floating a $500 million rescue plan that could give the government a hefty ownership stake in the budget airline, which has declared bankruptcy twice since 2024. Spirit announced in March it was set to emerge from bankruptcy this summer, but jet fuel prices have roughly doubled since Trump and Israel launched a war with Iran, exacerbating the company’s long-standing financial trouble.
The debate over the airline’s future is an early and significant test of the administration’s response to the economic fallout of war-induced fuel shortages.
“I think we just buy it,” Trump told reporters in the Oval Office on Thursday, insisting it would be a “virtually debt-free” cache of assets. “And when the price of oil goes down, we’ll sell it for a profit. I’d love to be able to save those jobs.”
But inside the administration, there is debate. Commerce Secretary Howard Lutnick has championed the purchase, according to two people familiar with the dynamics, while Transportation Secretary Sean P. Duffy has argued publicly against intervention in private business.
“What we don’t want to do is put good money after bad,” Duffy told Reuters, “and there’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability.”
Spirit’s competitors, arguing that they are also suffering from economic pressures, have put forth their own proposal that would bail out the entire budget airline industry. The proposal, reviewed by The Washington Post, would subsidize jet fuel to the tune of $2.5 billion and cut fees and taxes to relieve the economic pressure created by the war.
“You encouraged our group to think broadly about the scope and types of relief amidst an extraordinary fuel cost environment that would support our continued ability to provide affordable air travel,” wrote Jonathon Freye, executive director of the Association of Value Airlines, in a letter to Duffy.
Spirit, however, remains hopeful that it can hatch its own deal with the Trump administration. Spirit has outlined the details of the plan to three of its top creditors, said Marshall Huebner, a Davis Polk lawyer representing the airline in bankruptcy court. Huebner argued that the airline’s “advanced discussions” about a bailout would result in a company that could compete within the budget airline sector.
But some prominent Republicans have argued against any intervention.
“This is an absolutely TERRIBLE idea,” Sen. Ted Cruz (R-Texas) posted on X this week.
Cruz compared the proposal to the bank bailouts during the 2008 Great Recession, which saved over-leveraged banks but ultimately helped fuel the conservative tea party movement.
“The government doesn’t know a damn thing about running a failed budget airline,” he wrote.
The political advocacy group founded by former vice president Mike Pence issued a policy paper Thursday titled “Say No to Government-Run Airlines” that urged against picking winners and losers with tax dollars.
Trump’s declining approval numbers have emboldened some Republicans to break from the president in ways they haven’t before, especially on core principles like government-subsidized business, Texas-based GOP strategist Brendan Steinhauser said.
“It’s given space for these Republicans to come out and talk about what they have been wanting to talk about in some cases for years, in some cases stretching back to the first Trump administration in 2016,” Steinhauser said.
The White House blamed the company’s financial challenges on the Biden administration.
“Spirit Airlines would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue,” White House spokesman Kush Desai said in a statement. “The Trump administration continues to monitor the situation and overall health of the U.S. aviation industry that millions of Americans rely on every day for essential travel and their livelihoods.”
The Department of Transportation declined to comment. The Commerce Department did not respond to requests for comment.
Since Trump’s second inauguration, the U.S. government has invested $20.9 billion across 16 deals involving direct ownership, according to the Council on Foreign Relations.
“These deals represent the highest number of equity transactions across strategic sectors by the U.S. government since World War II,” said Jonathan E. Hillman, a senior fellow who tracks the deals for the Council on Foreign Relations.
But unlike the Spirit deal, most of those transactions had national security implications.
Critics of the White House’s interventionist strategy say the moves contradict the free market ideals that Republicans have long endorsed.
“They talk a good game and they do some good stuff in certain areas, but in a lot of others, they do things that are indistinguishable from Bernie Sanders and Elizabeth Warren,” Scott Lincicome, a senior fellow with the libertarian Cato Institute, said of the U.S. senators from Vermont and Massachusetts.
Lincicome was opposed to the bailouts to the banks during the financial crisis, but he called a loan to Spirit “a lot worse” because there is no risk that the company’s collapse would cause an economic collapse.
“It would not register as a blip in the U.S. economy,” he said, arguing that the greatest potential damage was canceled flights and angry passengers. “It’s just politics mucking with capital markets.”
Trump ran an airline decades ago, the Trump Shuttle, which flew white-collar passengers between New York, Boston and Washington. He bought the regional airline out of bankruptcy in 1988 with an eye for retrofitting the 21 planes with marble and other luxury touches, which ultimately proved unworkable. He launched the rebranded Trump Shuttle in 1989, but turned it over to creditors three years later.
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