Trump Admin Eyes Defense Act Aid for Spirit Airlines

The Trump administration is considering invoking the Defense Production Act to provide financial support to Spirit Airlines, the Florida-based budget carrier facing its second bankruptcy in two years, as it struggles to secure funding amid soaring jet fuel prices driven by the war in Iran.

Officials familiar with the discussions indicated that the government could use Title 3 of the 1950 law, which authorizes loans and investments to bolster industrial capacity for national defense purposes. This approach would enable the administration to extend up to $500 million in debtor-in-possession financing to help Spirit exit Chapter 11 bankruptcy proceedings. In exchange, the government would receive warrants for 90 percent of the airline's equity upon emergence from restructuring. The proposal requires approval from Spirit's major creditors, who have reviewed a term sheet outlining the terms.

Spirit, known for its low-cost domestic routes and bright yellow fleet, filed for bankruptcy protection earlier this year after mounting losses and debt exceeded $3 billion. The carrier had anticipated exiting bankruptcy this summer following an agreement with creditors to reduce its obligations...