US considers using Defense Production Act in Spirit Airlines restructuring: source
The Florida-based budget carrier is running short on time
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[WASHINGTON] US President Donald Trump’s administration is considering using the Defense Production Act as the legal basis to bail out Spirit Airlines, a source told Reuters.
CBS News first reported the potential plan on Friday (Apr 24), citing US officials familiar with the discussions.
The source said that the government could invoke Title 3 of the Defense Production Act that allows the US government to invest in industrial capacity to ensure supply chains for national defence.
The Trump administration “continues exploring possible options to ensure the airline remains in operation for its passengers and employees”, White House spokesperson Kush Desai said.
He added that reporting about the mechanism or structure of the financing should be regarded as speculation.
The Defense Production Act is an emergency authority that allows the US government to require private companies to prioritise federal contracts and boost the output of critical goods. It also permits loans to private firms for national defence purposes, a measure that may offer support to the airline.
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Trump said on Thursday his administration was looking at buying the embattled airline at the “right price”.
“When the price of oil goes down, we would sell it for a profit,” he told reporters at the White House.
The Florida-based budget carrier is running short on time. A lawyer for Spirit said on Thursday that it needs new financing or access to its cash by the end of next week, and a court hearing is set for next week as lawyers for the company and creditors aim to reach an agreement on a bankruptcy exit plan.
The Trump administration has made a financing offer to help the airline exit bankruptcy that was being reviewed by its major creditors, an outside lawyer for Spirit said on Thursday.
A lawyer for Spirit creditors said on Thursday that they had reviewed a term sheet of the government’s offer that sources say includes US$500 million in financing and a condition the government receive warrants equal to 90 per cent of Spirit’s equity.
The senior debtor-in-possession financing would help Spirit exit its second bankruptcy restructuring since 2025. REUTERS
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