The Trump administration is nearing a rescue package for Spirit Airlines that could give the U.S. government the option to own as much as 90% of the carrier once it emerges from bankruptcy, according to people familiar with the matter.

The agreement, which has not yet been finalized, would offer as much as $500 million in financing in exchange for warrants to purchase up to 90% of the new entity, said the people, who spoke on condition of anonymity to describe the deal before it is announced. The talks are still fluid and an agreement might still not be reached. It’s also unclear what stake the U.S. might ultimately end up with.

President Donald Trump said Tuesday that he was open to offering federal assistance to the airline. U.S. Commerce Secretary Howard Lutnick is leading the effort for a possible government deal, the people said. There’s internal disagreement about whether to proceed, according to one of the people.

Lutnick was also a key player in the government’s decision to take a 10% stake in Intel Corp.

Spirit Aviation Holdings Inc.’s shares jumped as much as 57% on the prospect of a government lifeline that could help it avoid a potential liquidation. A spokesperson for the airline declined to comment.

During his second term, Trump has shown an extraordinary willingness to take financial positions in private-sector companies that his administration deems essential. The strategy has drawn scrutiny from critics who question whether the approach could skew markets and create risks for taxpayers.

Sen. Tom Cotton, Republican of Arkansas, said a rescue was “not the best use of taxpayer dollars.”

“If Spirit’s creditors or other potential investors don’t think they can run it profitably coming out of its second bankruptcy in under two years, I doubt the U.S. Government can either,” Cotton posted on X.

“The aviation industry is very important to this president and this White House. Millions of Americans depend on it. We want to see the best possible outcome,” White House Press Secretary Karoline Leavitt told reporters Wednesday. She said the Commerce Department and White House “are tracking” the situation with Spirit, but did not elaborate.

The Wall Street Journal first reported that the Trump administration was close to reaching a deal on Spirit. Bloomberg News previously reported that Spirit was at risk of possible liquidation because of rising jet fuel prices spurred by the U.S. and Israeli war with Iran and that the carrier had floated the idea of the government taking a stake in the company, which has sought an emergency bailout.

Scott Kirby, chief executive officer of United Airlines Holdings Inc., said Spirit’s troubles stem from flaws in the ultra low-cost carrier’s business model known for offering cut-rate fares while charging customers for extras, such as assigned seating and in-flight snacks.

“The problems at Spirit predate the run-up in fuel,” Kirby said in a Bloomberg Television interview on Wednesday. “It was going to fail because the business model doesn’t work.”

Spirit had been poised to exit bankruptcy this summer after reaching an agreement with creditors on a plan to trim billions of dollars in debt and reduce the cost of its fleet. The carrier filed for Chapter 11 bankruptcy protection in August 2025 — the second time it did so in under a year.

The carrier in the past had tried to merge with other airlines but those efforts failed to result in a deal. Before filing its first bankruptcy, the carrier agreed to be acquired by JetBlue Airways Corp., but a federal judge blocked the tie-up in 2024 on antitrust grounds.

“The airline is bankrupt because the previous administration blocked the merger, which was probably not a wise move,” Leavitt said.

Bloomberg News reported last year that Frontier Group Holdings Inc. and Spirit had revived talks to merge, though no deal ever emerged.

(With assistance from Jennifer A. Dlouhy and Reshmi Basu.)

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