What smart people are saying about a potential Spirit Airlines bailout

• Donald Trump is considering federal support for Spirit Airlines amid ongoing financial struggles.
• Analysts and aviation experts see market risks in government intervention.
• Senators Warren and Cruz expressed skepticism over a taxpayer-funded bailout for Spirit Airlines.

President Donald Trump signaled openness to the government having a stake in Spirit Airlines, and people have thoughts.

Speaking to CNBC on Monday, Trump said, "Maybe the federal government should help that one out," adding that he had raised the idea to his team.

The struggling budget carrier has spent the past two years grappling with bankruptcy and a failed merger with JetBlue that collapsed after a federal judge blocked the deal on antitrust grounds. Since then, Spirit has struggled to return to profitability.

Here's what politicians, analysts, and some of the industry's smartest people are saying about a potential bailout.

Jamie Baker

Jamie Baker, a JPMorgan analyst specializing in aviation, wrote in an analyst note on April 16 that he hopes a government takeover of Spirit is a "low-probability scenario," because airline investors already have "their share of headaches to contend with."

"Spirit's bankruptcies were not driven by higher oil, nor has the company claimed as much," Baker wrote. "Should the administration afford any sort of cash infusion, we believe JetBlue and Frontier would be inclined to quickly follow Spirit's lead."

"Were that to happen, would American be far behind?" Baker added.

In an April 23 analyst note, Baker said that an avenue "worth exploring" is for the administration to step in and wind down Spirit in an orderly manner that would minimizepassenger disruption and to "influence the reallocation of its remaining fleet and assets."

Elizabeth Warren

Sen. Elizabeth Warren questioned whether taxpayers would benefit from a bailout in a post on X on April 22.

"Donald Trump's war with Iran caused the sky-high fuel prices that finally did Spirit Airlines in," Warren wrote.

"What do the American people get out of this taxpayer bailout?" she added. "Will the failed airline executives be held accountable?"

Scott Kirby

United Airlines CEO Scott Kirby said during the company's April 22 earnings call that he is not concerned about Spirit affecting United and that United does not need a federal bailout.

"Well-run airlines are still solidly profitable, even in this environment," said Kirby. "Whether Spirit fails or keeps flying, I don't think it has much effect on United, one way or another, to be honest."

"I feel bad for the people of Spirit, but it's been pretty obvious that Spirit's business model was fundamentally flawed, and the airline was not going to be able to make it or recover their cash operating costs," Kirby added.

Gary Leff

Gary Leff, a travel and points expert who is the main writer behind View From the Wing, wrote on April 20that fuel prices aren't the issue.

"This is being framed as an emergency due to the cost of fuel. But this is not because of fuel," Leff wrote. "And the Trump administration isn't going to want to see an airline go under because of its military operation in Iran."

Leff said that he doesn't think fuel is to blame because Spirit spent most of the last two years in bankruptcy, doesn't have a clearly viable business model, and has "a terrible brand with consumers."

"The economy as a whole doesn't benefit when investment decisions get made politically," Leff added. "Socializing losses and privatizing gains doesn't just lead to a cronyist economy, it leads to too much risk-taking because owners don't really risk loss themselves."

Ted Cruz

Sen. Ted Cruz called bailing out Spirit Airlines an "absolutely terrible idea" in a post on X on April 22.

"The TARP corporate bailouts were a huge mistake & the government doesn't know a damn thing about running a failed budget airline (that the Biden admin killed)," Cruz wrote.

Ben Schlappig

Ben Schlappig, a travel blogger, consultant, and points expert who founded the One Mile at a Timeaviation blog, wrote in an April 21 article that the government taking a stake in individual airlines "seems like a bad idea for competition."

"I don't want to be unsympathetic, but I don't think taxpayer money should go toward keeping one struggling airline alive, essentially just subsidizing airfare for a matter of months," Schlappig wrote.

"The topic of broader industry support is also one that I think will be discussed more in the coming weeks," Schlappig added. "If oil prices stay very high, even the world's most profitable airlines will be losing money, and the industry could be radically reshaped in a short period of time."

Sara Nelson

Sara Nelson, president of the Association of Flight Attendants, which represents 55,000 flight attendants across 20 airlines, wrote on X on that the union had supported the failed JetBlue-Spirit merger and that the benefits of airline workers should be kept in mind if there is a bailout.

"Now, thousands of Flight Attendants and other frontline workers have their lives, paychecks, healthcare, homes, and retirement hanging in the balance," Nelson said in the April 22 post.

"Let's remember real people are hoping and praying for a lifeline. And no doubt they deserve it!" Nelson added. "But if nothing else, they especially deserve consideration and kindness."

The post What smart people are saying about a potential Spirit Airlines bailout appeared first on Business Insider