A lawyer for the struggling low-cost carrier said during a hearing Thursday that the money available to keep Spirit Airlines afloat will not last long and that a government bailout is being considered.
“We’re looking at doing that, we’re going to support them, we’re going to bail them out or buy them out,” President Donald Trump told reporters at the White House late Thursday.
President Trump told reporters that “if oil prices go down,” the government could “sell oil and make a profit.”
“I’d be happy if we could save those jobs. I’d be happy if we could save the airlines. I like having a lot of airlines, so it’s competitive,” he said.
The company’s lawyer, Marshall Huebner of Davis Polk, did not outline the proposed rescue plan at Thursday’s bankruptcy hearing, but a person familiar with the matter told CNBC this week that a $500 million loan that could give the government a potential 90% stake in the Florida-based airline is being considered. They requested anonymity because they were not authorized to discuss the talks.
The agreement also allows the U.S. government to select board members, a person familiar with the potential terms told CNBC.
The White House and Spirit did not respond to requests for comment about board seats.
“We are grateful for President Trump’s support and look forward to continuing to work with him and his administration on solutions that protect thousands of jobs, preserve and strengthen competition, and ensure Americans continue to have access to affordable fares,” Spirit CEO Dave Davis said in an emailed statement.
Huebner said Thursday that the company needs to raise either existing cash or new funds in the coming days to continue operating.
“Spirit’s actual availability of cash to fund its ongoing operations will not last for very long,” he said. “Therefore, either new financing or access to approximately $240 million in restricted cash, or both, is absolutely necessary for Roundabout by the end of next week at the latest.”
The airline is on the verge of closure. The possibility of a deal is being shared with various creditor groups, the people said.
Spirit had expected to emerge from bankruptcy in the middle of this year, but the company said rising fuel prices since the U.S. and Israeli attacks on Iran complicated its plans.
The iconic low-cost carrier has faced problems over the years, including engine recalls and airline takeovers. jet blue airlines A federal judge blocked it two years ago, even before fuel prices soared this year as customer tastes shifted to higher-end products and rising costs.
“Spirit is now at a critical crossroads,” Huebner said, noting that “hundreds of millions of dollars” of the company’s cash is “locked up and inaccessible” under the terms of the bankruptcy loan, while other funds are placed in separate accounts for payroll and tax payments.
Hübner said the additional financing would create an independent airline “a fierce, well-capitalized competitor in the aviation industry,” but also hinted at a possible merger: “It could potentially become the strongest player in what many believe should happen next: consolidation in the value carrier space.”
