The Trump administration is exploring using the Defense Production Act as part of a strategy to save the beleaguered Spirit Airlines, according to U.S. officials familiar with the discussions.
President Trumpis opento some type of federal action, several sources told CBS News, and he has said publicly he'd "do it to save the jobs."
Spirit has declared bankruptcy twicein the past two years, after the Department of Justice blocked a merger with JetBlue during the Biden administration. TheIran warhas been driving upjet fuel costsfor all airlines and earlier this month, creditors expressed serious doubts Spirit could remain viable.
The Defense Production Act is an emergency power typically used to compel private sector companies to prioritize government contracts and increase supplies of critical goods.
It also includes providing loan authority to private firms for national defense, potentially a lifeline for the airline.
The strategy would be subject to approval from Spirit's creditors, two of the officials told CBS News.
The Office of Management and Budget has explored what a federal bailout of Spirit Airlines would look like and has discussed possibilities that would include Commerce Department and Pentagon involvement.
The government would lend Spirit $500 million at a reasonable rate interest, and become the top debtor in the bankruptcy pecking order. The loan would be protected by Spirit assets that would exceed the government's costs, and would provide taxpayers with a warrant — the right to own 90% of the company after it emerges from bankruptcy.
The Pentagon would use Spirit's excess capacity for transporting troops, military cargo or other missions, sources told CBS News.
The airline would then likely be sold to another carrier.
Source: Drudge Report
