Soaring fuel prices are threatening air carriers around the world, and in the US the White House is scrambling to save the long-troubled Spirit Airlines.

The carrier is in bankruptcy court and is quickly running out of cash. Reports last week suggested that the Trump administration was in talks to loan as much as $500m to the company as it teetered on the brink of liquidation. Then on Thursday, Trump told reporters the federal government might buy the ailing airline.

“We’re thinking about doing it, helping them out, meaning bailing them out, or buying it,” Trump said, adding that the government could “sell it for a profit” when oil prices come down.

The news highlights the strain Spirit Airlines has been under the last few years, particularly in recent months as jet fuel costs have soared amid the war in Iran.

Here’s what we know about the troubles that have plagued Spirit Airlines and how the federal government could step in.

What happened to Spirit Airlines?

Spirit is the largest budget airline in the US. Before the company started downsizing its fleet as part of bankruptcy restructuring, the company served more than 60 destinations across the US, Latin America and the Caribbean. The airline is best known for its cheap flights, with low base fares but expensive add-ons for things like carry-on bags and seat selection.

Spirit has had a rough few years due to a perfect storm of fleet manufacturing problems and reduced demand. While other major US airlines were able to recover from the impacts of the pandemic, Spirit has been struggling.

In 2024, a federal judge blocked JetBlue from acquiring Spirit for $3.8bn on antitrust grounds. The judge said that the merger would reduce competition among airlines and harm customers.

The airline declared bankruptcy in November 2024 as it struggled to manage its debt. It declared bankruptcy a second time in August 2025, by which the company had accumulated about $7.4bn in debt.

The company’s debt and revenue woes have been compounded by higher jet fuel prices. Prices for diesel, a heavier type of oil that is used for planes, trains and trucks, have risen at least 40% since the start of the Iran war.

Why does the White House want to step in?

If Spirit ends up liquidating, it would be the first major US carrier to liquidate since the 2008 recession – which wouldn’t be a great look for the White House at a time when consumers are on edge about the economy and high prices.

Amid reports that Spirit was on the verge of liquidation, Trump told CNBC on Tuesday that he was aware the company is in trouble, adding: “I’d love somebody to buy Spirit.

“It’s 14,000 jobs, and maybe the federal government should help that one out,” he said.

In a statement to the Guardian, White House spokesperson Kush Desai said the airline “would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue” and that the administration is monitoring the situation and the health of the aviation industry.

What deal could the White House make?

The Trump administration has floated giving the company a $500m loan or acquiring the airline. This would be the first major airline bailout since the pandemic, when the federal government offered loans to the major air carriers as passenger counts temporarily plummeted.

“We’re thinking about doing it, helping them out, meaning bailing them out, or buying it,” Trump said last week. “They have some good aircrafts, some good assets, and when the price of oil goes down, we’d sell it for a profit.”

How are other airlines doing?

Jet fuel prices have also affected the other major carriers, though they are nowhere close to experiencing the same financial troubles as Spirit.

The CEOs of Delta and United said though higher fuel costs mean the companies have to reduce growth plans, demand among their customers remains strong. Ed Bastian, the CEO of Delta Air Lines, said earlier this month that there’s room to raise prices on customers, without affecting demand, to offset higher fuel costs.

In February, Scott Kirby, United Airlines’s CEO, reportedly pitched to Trump a merger between the airline and competitor American Airlines, arguing that consolidation would help US companies compete internationally with other airlines, particularly ones that receive state funding.

While Trump has been friendly to mergers in other industries, the president has dismissed the idea of a United-American merger saying: “I don’t like having them merge.”

What would a deal mean for travellers?

If the White House grants a loan to Spirit, the airline would continue to operate as normal in its reduced capacity as it works out how to repay its creditors.

The US government buying a private airline company would be unprecedented – financial rescue packages have usually entailed loans to keep a company afloat – so it’s unclear what a government-owned Spirit Airlines would look like for consumers.

For travellers, the worst case scenario is the airline shutting down – which in the short-term would probably leave tens of thousands of passengers stranded, upping the stakes for a bailout.

In the long-term, the disappearance of a major carrier like Spirit would reduce competition in a heavily consolidated industry. Currently, just four major airlines take up three-fourths of the industry’s market share. Less competition often means higher prices for customers.

Even if the federal government steps in to save Spirit, experts say the industry is still plagued with problems that often leave consumers paying higher prices for less.

“Bailing out or buying out Spirit won’t solve the long-term, systemic competition and stability problems with the airline industry,” said William McGee, senior fellow for aviation at the American Economic Liberties Project. “The current state of mergers, bankruptcies, bailouts and lack of competition need to be addressed by introducing sensible new forms of regulation. Anything less is bound to fail.”