We know that President Trump is working on a plan for the government to bail out Spirit Airlines. The airline hasn’t turned a profit in seven years, and is continuing to hemorrhage money. The idea is to give the airline a $500 million loan, and for that to eventually give the government a 90% stake in the airline.
But what’s actually the legal mechanism by which Trump wants this deal to happen? We’re now learning more details about what this will look like…
In this post:
Trump to use Defense Production Act to buy Spirit
It’s now being reported that the Trump administration’s plan to bail out Spirit Airlines could be done using the Defense Production Act. That’s an emergency power that’s typically used to compel private sector companies to prioritize government contracts and increase supplies of critical goods. This also includes providing loan authority to private firms for national defense.
The idea is that the government would lend Spirit $500 million at a reasonable interest rate, and the government would then become the top debtor in the bankruptcy pecking order. The loan would be protected by Spirit assets, which would reportedly exceed the government’s costs, and would provide taxpayers with a warrant, with the right to own 90% of the company after it emerges from bankruptcty.
The Pentagon would also potentially use Spirit’s excess capacity for transporting troops and military cargo, with the goal of selling the airline to another carrier in the long run.
There’s not a whole lot that makes any sense here
On the one hand, I’m sort of delighted to see some conservatives now embracing socialism, so I guess that’s the upside here. 😉 But let’s be clear about how this is likely to play out:
- $500 million will last Spirit a matter of months based on its current burn rate, at which point the government will own 90% of the airline
- The government will then own 90% of an airline running huge operating losses, and Trump somehow thinks that other airlines will be interested in buying it, even though the interest hasn’t been there up until now
- If the government starts turning Spirit into a big government contract airline, then that also seems rather unfair; so the key to getting lucrative government contracts is to be days from liquidation after having a failed business model for many years?
I’m not sure if Trump just doesn’t understand the airline industry, if he can’t keep his narrative straight, or what. Because he contradicts himself with this Spirit deal even just sentences apart. For example, he saiD:
“I think we just buy it. We’d be getting it virtually debt-free. They have some good aircraft, good assets — and when the price of oil goes down, we’ll sell it for a profit. I’d love to be able to save those jobs… I like having a lot of airlines so it’s competitive.”
He says the government will sell Spirit at a profit to another airline, and then in the next sentence he says he likes having lots of airlines so the industry is competitive? Is that logic tracking for anyone?
Then again, it’s not even the most bizarre thing he said about Spirit. The prize for that has to go to his claim that Obama (president from 2008 to 2016) decided it was a bad idea for Spirit and People Express to merge (People Express went out of business in 1987).
Bottom line
President Trump reportedly wants to buy Spirit Airlines under the Defense Production Act, an emergency power typically used during times of war. The idea is that the government would loan Spirit $500 million, and that would ultimately give the government a 90% stake in the airline, as its top debtor.
Trump then wants to turn around and sell the airline at a profit, even though the interest hasn’t been there up until this point…
What do you make of Trump trying to use the Defense Production Act to make this deal happen?
By the way, he is a Gemini in astrology a June birthday. Analytically, a Gemini has two faces, speaks from both sides of the mouth.
Does that sound like him?
Dear President Trump, please explain to me why this obvious business opportunity isn't being pursued by others. The $500 million price tag is 0.13% of Berkshire's cash. Why hasn't Warren (it's OK, he's a friend I've never met) decided to do this? Or, any of a host of other people who could come up with that easily? You are a pathetic individual who will spend the next 100 years as the example of how-to-make-less-than-normal-low-risk-stock-market-returns by...
Dear President Trump, please explain to me why this obvious business opportunity isn't being pursued by others. The $500 million price tag is 0.13% of Berkshire's cash. Why hasn't Warren (it's OK, he's a friend I've never met) decided to do this? Or, any of a host of other people who could come up with that easily? You are a pathetic individual who will spend the next 100 years as the example of how-to-make-less-than-normal-low-risk-stock-market-returns by screwing others in MBA classes.
Despite the criticicsms of Trump. I would rather he spend on things like this and critical infrastructure, than the girly stuff Kamala would have spent it on like childcare.
Spoken like the lil twat you probably are
Yes, because childcare would free up people to enter the workforce and grow the economy and contribute to the tax base.
Not sure how Spirit is a critical asset. US carriers are already required to transport troops when asked by the DoD, and the govt can charter airlines like anyone else. Why is the GOP so pro private companies running prisons and Medicare, but not an airline.
@Hank Tarn
Biden allocated trillions to actual critical infrastructure, not the failing businesses that use said infrastructure. Harris was his VP. Why didn't you vote D to continue that AND get healthcare reforms? What part of Trump's platform was so compelling to you that you were fine throwing that away? Did you think other countries paid the tariffs or something?
I'm amazed that no one has suggested what immediately popped into my mind when I hear about the possible bailout: Trump will use Spirit Airlines to transport detained immigrants to deportation centers in other states, and possibly to fly them out of the country. I believe Spirit currently flies internationally to 25 or so destinations, mostly in Central and South America, and the Caribbean.
And I'm a glass-half-full kind of guy!
I find it peculiar that TDS’ers on the left are so adamant that people at NK lose their jobs.
Bad juju sentiments only lead to bag juju so, when it’s your turn at misfortune… well remember that.
I find it peculiar that Rs, who formerly espoused unfettered capitalism, are now suuuuuuper into socialism since they can’t help but lick 47’s boots.
Sheesh. If true, then he can just say 'national security' and be a dictator 'on day 1'... oh, wait.
I hope you assholes that voted for this piece of shit are happy.
It's entirely your party's own fault. First they allowed Biden to run again, and then when he was finally forced out, the anointed Kamala. If the so called "party of democracy" had allowed an open primary, there might have been a more centrist candidate that could have won.
All that said and notwithstanding all that has happened, would still rather have Trump as president than Harris.
@David
Biden wasn't "allowed" to run again. He won the DNC primary overwhelmingly. His only internal competitors lost even harder than they did in 2020. Not to mention, Biden's actual record in office was better than any president since Carter or LBJ. That's in terms of economic growth, jobs created, new manufacturing jobs, bipartisan legislation passed, ending the forever war in the ME (that Trump restarted), and standing up to Russia in Ukraine.
What's...
@David
Biden wasn't "allowed" to run again. He won the DNC primary overwhelmingly. His only internal competitors lost even harder than they did in 2020. Not to mention, Biden's actual record in office was better than any president since Carter or LBJ. That's in terms of economic growth, jobs created, new manufacturing jobs, bipartisan legislation passed, ending the forever war in the ME (that Trump restarted), and standing up to Russia in Ukraine.
What's your excuse? The GOP had so many primary contenders they had to run a JV debate before the big one to weed out candidates. And with a field flush with decent people, yall chose Trump. A man who cheated and lied to you in his first term, whose foreign policy hiked your cost of living, and whose reaction to COVID caused hundreds of thousands, if not millions, of needless deaths. How on earth could Harris possibly be worse?
It's not going to happen. He does not have the legal authority to direct the government to buy or invest in private businesses. He would also likely be challenged by interested parties seeking a stay.
Next week most likely come and Spirit will either liquidate, find some alternate form of financing (doubtful) or find the means to continue on into the following week.
Now I hope it happens, just so that you, in-particular, are wrong, Georgie.
Who bails out on the 3rd bankruptcy?
Dr. Jesus
This has nothing to do with socialism; rather this is nothing more than corrupt crony capitalism. Republican megadonor Ken Griffin’s Citadel holds significant debt stakes in Spirit and would stand to lose vast sums if it is liquidated. This is using taxpayers’ dollars to shield Ken Griffin from a bad investment.
Griffin is worth $50 billion, and Citadel owns about $166 million in Spirit debt, which I'm sure has been nicely derivitized to spread the risk around. He'll come out on top.
C’mon. This purchase is purely about optics and nothing else. Spirit is headquartered in blood red friendly Florida and MAGA is likely its prime customer base. There is no logic and the thing will use whatever narrative he can think up to justify the transaction. Fact based rational economics has virtually no home in this administration and the minions scurry around trying to support whatever storyline fits POTUS’ agenda du jour. Simple as that.
From what I see in YT videos appears to be a lot of Harris supporters that don't think the laws apply to them. It's flying Section 8 housing.
Mr ‘rump can do with Spirit all he wishes …. however, when it comes to the sovereignty of the Falkland Islands, he needs to wind his neck in or suffer the consequences.
Speaking of British overseas mishaps, is Iran 2026 our Suez Crisis (1956)?
Ok! …. I’ll bite so Ben gets a click ….
Surely 1990Bot, you cannot be serious, the ‘82 Falklands fracas was no “Mishap”.
Now Southeast Asia ‘55-‘75, Op Eagle Claw ‘80, Op Enduring Freedom ‘01–‘14 or Op Iraqi Freedom ‘03–‘11, to mention but a few real U.S. “Mishaps” …. :-)
Sadly the UK can't even get one lousy destroyer to Cypress let alone to the Falklands.
Guffaw, guffaw …. you crack me up ‘omer darlink, you crack me up!
…. and do you think that Mr ‘rump is any better than Mr ‘tarmer? …. :-)
I'd take 1,000 Starmers over any Trump.
Then many thousands of UK citizens would call you and even bigger fool than Mr ‘rump.
He could use the planes for deportation flights, and call it Spirited Away Airlines...
Sure, but no need to rile up all the Ghibli enthusiasts…
Excellent reference, Peter! (Also, poor Totoro in South Park... 'shi-shu and seshishto'!)
Why do Americans think that every time the government gets involved in businesses it creates socialism? That’s not what socialism is! There are many reasons why the government bails out companies and that has proven well in capitalism. Though none of those reasons come to mind in this case.
Long live PEOPLExpress!
Can someone please explain why letting an airline that caters to American trash needs to stay in business for the country's own good?
Can someone explain how national security is dependent on acquiring the Falklands? Can someone please explain why the President, who went from a single annual medical exam to multiple medical exams (which include test specific to the progress of dementia), has now skipped last week's scheduled exam? Congress is asking why. Trump has betrayed the MAGA movement.
Oil and gas. The US government can F off. Any country that has an immigrant like Valentina Gomez and doesn’t strip her citizenship and deport her, a bats.. fruitcake like Paula White as “ spiritual advisor” and a president who has no idea what he’s doing, is seriously mentally unstable and spends 24 hrs a day harassing and bullying groups and individuals isn’t an ally.
The MAGA movement is an abomination and a product of Satan. It has betrayed common sense, humanity, and decency. It is a Nazi ideology and it is filth.
Is America Great Again Yet, Epstein Class?
one day there will be penalties for thumbing one's nose at the law like this, i've heard many people are saying they might even be retroactive up and down the chain of command
anyway, did you guys see that the federal government is bringing back firing squads? just discussing the things that the government is doing
When the money runs out Trump will bully one of the big 3 to buy it for a bargain and claim that’s somehow a good deal for tax payers.
The videos I have seen of passenger freakouts on spirit flights lead me to believe Spirit is actually a national security threat
Wonder what scale of insider trading will be going on during this "rescue-sell" operation.
Yes Pelosi’s types have been very good at that over the years.
@KlimaBXsst
I have a challenge for you. Go look up the top performing Congressional stock portfolios. Check the growth of the top R investors vs top Ds. The results may surprise you.
Hint: Pelosi wasn't even in the top 10
Well definitely DOD flights, and repatriation flights, and Trump Branding might be an option for Spirit to capitalize upon a different segment of the low cost market that does not suffer from TDS.
I guess PDT is looking at all options to keep people working, as legal and political challenges of supplying Spirit with funds are likely to run out the money clock.
At least the employees of Spirit will go out knowing PDT was...
Well definitely DOD flights, and repatriation flights, and Trump Branding might be an option for Spirit to capitalize upon a different segment of the low cost market that does not suffer from TDS.
I guess PDT is looking at all options to keep people working, as legal and political challenges of supplying Spirit with funds are likely to run out the money clock.
At least the employees of Spirit will go out knowing PDT was doing more than others such as the AFA or the Democrats to keep NK going until they could be bridged into an acquisition by another airline.
You do understand what a government is supposed to do and what’s the case here? If it was under Biden you’d be travelling with a pitch fork to DC
I'm confounded by the fact this guy ran his businesses to the ground, is in the process of running this country into the ground, and can find another way to run another airline that's arguably already about to hit the ground.
So much winning...
Whatever stupid idea Trump has come up with during his second term, and there are many of them, he has argued with national security.
Since ULCCs are meant for human garbage, what a massive disrespect this is to our men and women who serve.
So you’re flying it then?
Anyone who thinks others humans are garbage needs to take a good long look in the mirror.
Shut up, human garbage.
Not sure who is more mentally diminished at this point, 47 McCankles or Lil Timmy D
Is 500 million $ even a significant figure these days???
We threw 500x that amount at Ukraine for zero benefit and send 6x every year to Israel with zero contingencies.
Why is everyone having verbal diarrhea at trump buying spirit for the cost of 10 missiles?
That’s not the point, the point is that the Congress holds the purse strings, not the president. Read the US Constitution some time, it’s very interesting.
Tell me you are not living in the moment without telling me. Congress has abdicated their Constitutional responsibilities to .
No one cares about the constitution, especially not the govt.
i'm good to cut IL off, good talk
Probably because keeping Russia from forcibly annexing their neighbor sets a good example internationally, while buying a failing airline is equivalent to setting that cash on fire.
As you pointed out, the fact that trump is literally the most socialist president we have ever had is just ***chefs kiss***
Leaving market forces to work leads to results that make more sense. Noting that EU airlines are cutting flights and consolidating routes to weather the effects of Trump's war in Iran, how would this idea be of anyone's benefit. The Spirits have infested his brain again...
President Demento is off on another rant. Tranquilizer darts at the ready...
Trump was a registered Democrat for many years. He donated money to the Hillary campaign and other Democrats.
If he is a plant, he is trying to destroy the Republican party.
However, saving Spirit tends to be slightly more Democratic leaning so the plant theory is partly validated here.
And vaccines cause autism. Keep climbing.
To be fair, the man who ran Trump Shuttle into the ground ($125 million in losses before default) would make an excellent buyer for an airline that's never turned a profit. And he's doing it with someone else's money! OURS!
The same man who couldn't turn profit running A CASINO even with his pops dumping money into it.
Sure, whatever...let's just go full stupid.
Unless you are in the top 5%, it's not your money. The top 5% pays for most of the government. The top 15% pretty much pays for virtually all. The bottom 50% pays nothing. That is why the bottom 50% should run for office and seize all of the top 49%'s money or face prison. Make them have their fair share of prison time.
I might sound like a conspiracy theorist but how plausible is it that someone at Spirit management has said they'll rebrand as Trump Airlines if they get a bailout?
Spirit of Trump
There already was an airline named after Trump, the Trump Shuttle. It was just as successful as his casinos. It was never profitable. It defaulted on its debts, but Trump negotiated an exit in which he was relieved of the personal guarantees that he'd made.
I'm aware of his previous airline failure. However he is so pathetic that you know if someone offered to rebrand their airline, he'd give them money then claim he was the one that turned it around. This just has Spirit rebranding as Trump Airlines written all over it
The sad reality is this sounds entirely plausible