Spirit Airlines prepares to shut down after failing to reach lifeline bailout deal

Spirit Airlines is preparing to shut down after the iconic budget airline failed to reach a deal for a lifeline, according to people familiar with the matter.

The carrier could shut down as early as 3 a.m. ET, a source told CNBC. The people requested anonymity to speak about the discussions.

Talks with bondholders for a government bailout this week failed to yield a deal as of Friday. The Trump administration last month had offered a $500 million loan that could have given the government up to a 90% stake in the Florida-based airline.

President Donald Trump said earlier Friday that his administration had extended a “final” bailout proposal.

The White House, the Department of Transportation and the Commerce Department didn’t immediate respond to requests for comment.

Spirit declined to comment on liquidation plans. The airline’s lawyer, Marshall Huebner, told a bankruptcy court in New York on April 23 that Spirit’s cash “is not going to last for very much longer.”

As of 5:30 p.m. ET, Spirit was still selling tickets on its website.

The carrier is in its second bankruptcy in less than a year and now has the added challenge of a spike in jet fuel prices amid the Middle East conflict.

United Airlines said in a statement Friday the carrier is “preparing to support Spirit customers and employees” if Spirit shuts down and strands crews and passengers, a spokeswoman told CNBC.

American Airlines said it had “immediately implemented fare caps on Main Cabin tickets for Spirit routes where we also offer nonstop service and will continue to support as many customers as possible.”

JetBlue Airways also said it would provide passengers and crews affected by a potential Spirit shutdown with flight options.

Spirit, which pioneered the low-cost budget airline model, has been challenged for years by rising costs, changing consumer tastes and a engine recall. A planned acquisition of Spirit by JetBlue was successfully challenged by the Biden administration two years ago.

The airline had expected to emerge from bankruptcy midyear before the jump in fuel prices.

Spirit flew around 1.7 million U.S. domestic passengers, with a 3.9% market share in the U.S. market, as of February, according to aviation data firm Cirium. That was down from 5.1% market share last year, as the airline axed flights to cut costs.